DCIT, Chandigarh V. M/s Narinder Mohan Mittal, HUF, Chandigarh

ITA 796/CHANDI/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77052 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 09-09-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Unexplained investment; Search and seizure; Document seized; Source of fund; Additional evidence; Fair market value; Valuation report; Documents seized
• Section: 143(3); 142(1); 153A; 69; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.794/CHD/2008 ASSESSMENT YEAR: 2002-03 THE DY. COMMISSIONER OF VS SURINDER MOHAN MITTAL , HUF INCOME TAX, SCF-10, CENTRAL CIRCLE-II, SECTOR 20-C, CHANDIGARH. CHANDIGARH. PAN : AABHS5202E AND ITA NO.795/CHD/2008 ASSESSMENT YEAR: 2002-03 THE DY. COMMISSIONER OF VS JATINDER MOHAN MITTAL , HUF INCOME TAX, SCF-10, CENTRAL CIRCLE-II, SECTOR 20-C, CHANDIGARH. CHANDIGARH. PAN : AACHJ8539H AND ITA NO. 796/CHD/2008 ASSESSMENT YEAR: 2002-03 THE DY. COMMISSIONER OF VS NARINDER MOHAN MITTAL , HUF INCOME TAX, SCF-10, CENTRAL CIRCLE-II, SECTOR 20-C, CHANDIGARH. CHANDIGARH. PAN : AAAHN4544C (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH RESPONDENT BY : SHRI VINEET KRISHAN DATE OF HEARING : 13.02.2014 DATE OF PRONOUNCEMENT : 09.05.2014 O R D E R PER SUSHMA CHOWLA, JM THESE THREE APPEALS BY THE REVENUE ARE DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) LUDHIAN A DATED 02.06.2008 RELATING TO ASSESSMENT YEAR 2002-03 AGAI NST THE ORDER PASSED 2 UNDER SECTION 153A R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED IDENTICAL GROUND OF APPEA LS IN ALL THE THREE APPEALS. THE GROUND OF APPEAL AS RAISED IN ITA NO. 794/CHD/2008 READ AS UNDER : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETION AN ADDITION OF RS.16,66,666/- MADE BY TH4E ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN THE PURCHASE OF IMMOVABLE PROPERTY (PLOT). 3. THE BUNCH OF APPEALS RELATING TO ASSOCIATE CONCE RN WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT THE RESIDENCE OF THE KARTA OF A SSESSEE HUF AND HIS TWO BROTHERS AND THEIR FAMILY MEMBERS ON 3.9.2004. NOTICE UNDER SECTION 153A OF THE ACT WAS SERVED UPON THE ASSESSE E REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME WITHIN ONE MO NTH OF THE SERVICE OF NOTICE. THE ASSESSEE FILED RETURN OF INCOME ON 4.5.2006 DECLARING INCOME OF RS.96,280/-. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE ISSUE OF PURCH ASE OF PLOT NO.70 (27% SHARE INDUSTRIAL AREA, PHASE-I, CHANDIGARH). THE ASSESSEE, HUF WAS CONFRONTED WITH THE AGREEMENT TO SELL DOWNLOADE D FROM THE COMPUTER OF ONE SHRI MUKESH MITTAL, AS PER WHICH TH E TOTAL SALE CONSIDERATION OF 27%, SHARE OF THE SAID PLOT WAS SH OWN AT RS.1 CRORE, WHEREAS AS PER THE SALE DEED REGISTERED ON 9.12.200 2, THE TOTAL CONSIDERATION FOR 27% OF SHARE WAS DECLARED AT RS.5 0 LACS. FURTHER THE ASSESSEE WAS ALSO CONFRONTED WITH THE VALUATION REP ORT DATED 16.7.2004, WHICH WAS ADDRESSED TO THE CHIEF MANAGER , BANK OF INDIA, 3 SECTOR 20, CHANDIGARH I.E. AS PER PAGE 44 AND 45 AS ANNEXURE-2B, IMPOUNDED FROM SCF 8, SECTOR 20-C, CHANDIGARH WHERE THE TOTAL VALUE OF THE LAND HAS BEEN VALUED AT RS.1,58,67,280/-. A NOTHER ASPECT OF THE TRANSACTION WAS THE STATEMENT OF SHRI NARINDER MOHA ND MITTAL FOR THE PURCHASES RECORDED AT THE TIME OF SEARCH PROCEEDING S UNDER WHICH HE WAS QUESTIONED THAT AS PER THE INFORMATION SHRI MUK ESH MITTAL HAD PURCHASED 50% OF THE PROPERTY MEASURING 10,000 SQ.Y D. FOR TOTAL CONSIDERATION OF RS.3.20 CRORES. HE WAS ASKED TO E XPLAIN THAT HOW ONLY RS.50 LACS WERE PAID FOR.6000 SQ.YD. OF AREA A S AGAINST MARKET RATE OF THE LAND IN INDUSTRIAL AREA, PHASE-I, CHAND IGARH AT RS.3000/- PER SQ.FT. IN REPLY, SHRI NARINDER MOHAN MITTAL E XPLAINED THAT AS THE PLOT WAS IN THE BACK SIDE AND IN THE FRONT PORTION ONLY THERE WAS A BUILT UP HOUSE, THE PRICE WAS LOW. IT WAS FURTHER EXPLAINED THAT HE SPENT RS.10 LACS ON CONSTRUCTION OF THE SAID PORTIO N OF THE LAND. FURTHER HE WAS ALSO CONFRONTED WITH THE VALUATION R EPORT AND THE REPLY OF THE ASSESSEE WAS THAT THE SAID VALUATION W AS FOR BANK PURPOSE ON CURRENT MARKET RATE. 5. THE STATEMENTS OF OTHER MEMBERS OF THE FAMILY WE RE ALSO RECORDED BY THE ASSESSING OFFICER WITH REGARD TO TH E SAID TRANSACTION OF PROPERTY. SHRI SURINDER MOHAN MITTAL, ANOTHER C O-OWNER IN HIS STATEMENT RECORDED ON 3.9.2004 ADMITTED TO HAVE PUR CHASED THE PROPERTY MEASURING 6000 SQ.YD. FROM SHRI MUKESH MIT TAL FOR RS.50 LACS, WHO IN TURN HAD PURCHASED 10,000 SQ.YD. OF TH E PROPERTY FROM MRS.ERA OHRI AND HER DAUGHTER FOR CONSIDERATION OF RS.3.20 CRORES, ABOUT THREE YEARS BACK. HE WAS CONFRONTED AS TO WH EN SHRI MUKESH MITTAL HAD PURCHASED THE TOTAL PLOT MEASURING 10,00 0/- SQ.YD. FOR RS.3.20 CRORES, THEN HOW WAS IT POSSIBLE THAT HE HA D PAID ONLY RS.50 LACS FOR 6000 SQ.YD. TO SHRI MUKESH MITTAL. IN REP LY HE STATED THAT OUR PORTION IS ON THE BACKSIDE OF THIS PLOT AND AS PER ADMINISTRATIVE 4 GUIDELINES, WE HAVE TO LEAVE 50 FT. PASSAGE (NON-CO NSTRUCTION AREA) AND ON THE BACKSIDE ALSO WE HAD TO LEAVE 30X200 FT. NON-CONSTRUCTION AREA. THIS PLOT WAS UNOCCUPIED FOR THE LAST 40 YEA RS. SHRI MUKESH MITTAL COULD NOT FIND ANY BUYER AND HAD TO SELL THI S PLOT IN DISTRESS. THE ASSESSING OFFICER IN VIEW OF THE ABOVE SAID TOT ALITY OF FACTS AND CIRCUMSTANCES WAS OF THE VIEW THAT THE ACTUAL SALE CONSIDERATION FOR THE SAID PORTION OF PROPERTY WAS RS.1 CRORE ONLY AN D INVESTMENT TO THE TUNE OF RS.50 LACS WAS MADE BY THREE CO-OWNERS EACH OUT OF UNDISCLOSED INCOME AND SHARE OF EACH CO-OWNERS BEIN G RS.16,66,666/-. THE ASSESSING OFFICER VERIFIED THE SOURCE OF INVEST MENT OF THE DECLARED VALUE AT RS.16,66,666/- AND ACCEPTED THE S AME. WITH REGARD TO THE POINT RAISED BY THE ASSESSING OFFICER VIS-- VIS UNEXPLAINED INVESTMENT IN THE SAID PROPERTY, THE PLEA OF THE AS SESSEE WAS THAT THE AGREEMENT TO SELL FOR RS.1 CRORE WAS NOT FOUND FROM HIS PREMISES AND WAS FOUND FROM THE COMPUTER OF SHRI MUKESH MITTAL, WHICH WAS NOT OPERATED IN THE PRESENCE OF THE ASSESSEE. 6. ANOTHER ASPECT CONSIDERED BY THE ASSESSING OFFIC ER WAS THE HAND WRITTEN DOCUMENT FOUND FROM THE POSSESSION OF SHRI. R.K. OHRI, WHICH DEPICTED BOTH CASH AND CHEQUE PAYMENTS. THE PLEA OF THE ASSESSEE WAS THAT IT WAS A ROUGH PAPER AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE HAD NO EVIDENTIARY VALUE AND HENCE NO ADDI TION ON THAT BASIS WAS JUSTIFIED IN THE HANDS OF THE ASSESSEE. ANOTHE R PLEA RAISED BY THE ASSESSEE WAS THAT THERE WAS FLUCTUATION IN THE MARK ET FREQUENTLY OF THE LAND PRICE AND AREA WHICH WAS UNUSABLE AREA WAS ALW AYS AT LESSER VALUE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PRINTOUT OF AGREEMENT OF SALE FOR RS.1 CRORES HAVING BEEN FOUND FROM THE COMPUTER OF THE SELLER HAD EVIDENTIARY VALUE AS PER THE LEGAL POSITION VIS--VIS CIRCUMSTANTIAL EVIDENCES AND THE PLEA OF THE ASSESSEE THAT IT WAS NOT A DOCUMENT OR THAT IT HAD NO EVIDENTIARY VA LUE WAS REJECTED. 5 FURTHER ASSUMPTION BY THE ASSESSING OFFICER AGAINST THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 132(4A) OF THE AC T WHEREIN IF ANY DOCUMENT, MONEY, BILLION, JEWELLERY OR OTHER VALUAB LE ARTICLES OR THINGS OR BOOKS OF ACCOUNT WERE FOUND DURING THE CO URSE OF SEARCH, THEN IT IS TO BE PRESUMED THAT SUCH BOOKS OF ACCOUN T OR OTHER DOCUMENTS BELONG TO SAID PERSON AND THE CONTENTS OF SUCH DOCUMENTS AND BOOKS OF ACCOUNT WERE TRUE AND CORRECT. THE AS SESSING OFFICER ALSO NOTED THAT THE DETAILS OF PAYMENT I.E. CHEQUE NUMBER, AMOUNT AND DATES MENTIONED IN THE IMPUGNED AGREEMENT FOR RS.1 CRORE HAD NOT BEEN DENIED BY THE ASSESSEE AND THE SAME WERE CORRO BORATIVE WITH THE DETAILS OF PAYMENT MADE BY THE ASSESSEE AS MENTIONE D IN THE SECOND AGREEMENT FOR RS.50 LACS FOUND FROM THE RESIDENCE O F THE ASSESSEE. IN VIEW OF THE CIRCUMSTANTIAL EVIDENCE AND IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN STATE OF U.P. VS. D R.R.P.MITTAL AIR 1992 (SC) 2045 WHICH HAD LAID DOWN THE ESSENTIAL IN GREDIENTS TO PROVE THE GUILT BY CIRCUMSTANTIAL EVIDENCE, IT WAS HELD B Y THE ASSESSING OFFICER THAT THE AGREEMENT TO SELL OF RS.1 CRORE WA S DIRECT EVIDENCE. FURTHER VALUATION REPORT AND THE SALE OF 50% OF PLO T FOR RS.3.20 CRORES CONSTITUTE CIRCUMSTANTIAL EVIDENCE AND IN VI EW THEREOF, THE VERACITY OF THE AGREEMENT OF RS.1 CRORES WAS IMPEAC HABLE. IT WAS NOTED BY THE ASSESSING OFFICER THAT FOR SUCH UNDER HAND DEALINGS DIRECT EVIDENCE CAN HARDLY BE FOUND AND IT HAS TO B E PROVED BY CIRCUMSTANTIAL EVIDENCE BUT IN THIS CASE IN ADDITIO N TO CIRCUMSTANTIAL EVIDENCE, DIRECT EVIDENCE IS ALSO FOUND DURING THE SEARCH . THE ASSESSING OFFICER THUS HELD THAT OUT OF THE TOTAL C ONSIDERATION OF RS.1 CRORE, THE PAYMENT OF RS.50 LACS AND OVER HEAD EXPE NSES HAD BEEN EXPLAINED BY THE ASSESSEE HUF AND REGARDING THE REM AINING PAYMENT OF RS.50 LACS, WHICH WAS THE ON MONEY, NO EXPLANATI ON HAD BEEN 6 OFFERED. THE SHARE OF THE ASSESSEE AMOUNTING TO RS .16,66,666/- WAS ASSESSED AS INCOME UNDER SECTION 69 OF THE ACT. 7. BEFORE THE CIT (APPEALS) THE ASSESSEE FILED WRIT TEN SUBMISSIONS WHICH ARE REPRODUCED AT PAGES 5 TO 17 OF THE APPELL ATE ORDER AND THE SAME ARE BEING REFERRED TO BY US BUT NOT BEING REPR ODUCED FOR THE SAKE OF BREVITY. THE SAID WRITTEN SUBMISSIONS WERE FOR WARDED TO THE ASSESSING OFFICER BUT DESPITE REMINDERS NO RESPONSE WAS RECEIVED FROM THE ASSESSING OFFICER. AS NO ADDITIONAL EVIDE NCE WAS FILED BY THE ASSESSEE, THE APPEALS WERE DECIDED WITHOUT ANY REMAND REPORT FROM THE ASSESSING OFFICER AND ON MERITS. THE CIT (APPEALS) OBSERVED THAT THE ASSESSING OFFICER HAD MADE THE IM PUGNED ADDITION ON THE BASIS OF THE AGREEMENT FOUND IN THE COMPUTER OF SHRI MUKESH MITTAL. HOWEVER, THE SAID AGREEMENT WAS NEITHER IN THE HAND WRITING OF THE ASSESSEE NOR WAS SIGNED ON BEHALF OF ANY OF THE PURCHASERS INCLUDING THE ASSESSEE FURTHER THE SALE AGREEMENT WAS NOT FOUND AND SEIZED FROM THE PREMISES OF THE ASSESSEE AND IN VIE W OF THE RATIO LAID DOWN IN VARIOUS DECISIONS RELIED UPON BY THE LEARNE D COUNSEL WHICH WERE PART OF THE WRITTEN SUBMISSIONS, ADDITION ON T HE BASIS OF SUCH DOCUMENTS COULD ONLY BE MADE IF THERE WAS ANY CORRO BORATIVE EVIDENCE. IT WAS FURTHER OBSERVED BY THE CIT (APP EALS) THAT IN THE CASE OF ASSESSEE THERE WAS SEARCH CARRIED OUT UNDER SECTION 132 OF THE ACT AND NOTHING INCRIMINATING WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH. FURTHER THERE WAS NO EVIDENCE FOUND AND SEIZED DURING THE SEARCH TO INDICATE THAT ANY CONSIDERATION OVER AND ABOVE THAT RECORDED IN THE REGISTERED DEED WERE PAID BY THE ASSESSEE. THE CIT (APPEALS) FURTHER OBSERVED THAT DURING THE COURSE OF SEARCH S TATEMENTS OF SHRI NARINDER MOHAN MITTAL AND SHRI SURINDER MOHAN MITTA L, KARTA OF THEIR INDIVIDUAL HUF WERE RECORDED AND THEY HAD MENTIONED THAT THE CONSIDERATION FOR THE PURCHASE OF THEIR PART OF THE PROPERTY WAS ONLY 7 RS.50 LACS. IT WAS FURTHER FOUND BY THE ASSESSING OFFICER THAT BOTH OF THEM HAD GIVEN SIMILAR REASON FOR APPARENT LOWER CO NSIDERATION FOR THE SAID PLOT VIS--VIS THE OTHER PART OF THE PLOT NO.7 0, INDUSTRIAL AREA, CHANDIGARH. FROM THE STATEMENTS, IT COULD NOT BE I NFERRED IN ANY MANNER THAT THE CONSIDERATION MORE THAN RS.50 LACS HAD BEEN PAID FOR PURCHASE OF THE SAID PROPERTY. 8. ANOTHER FACT CONSIDERED BY THE CIT (APPEALS) WAS SELLER M/S SHARVILLA ESTATES PVT. LTD. (IN SHORT SEPL) WERE SHOWING RELUCTANCE TO GET THE SALE EXECUTED IN FAVOUR OF THE ASSESSEE AND THE SAID COMPANY DID NOT MAKE THE APPLICATION TO THE ESTATE OFFICER. HOWEVER, THE ASSESSEE HAD TO FILE THE SUIT FOR PERMANENT INJUNCT ION ON 22.2.2002 IN THE COURT OF CIVIL JUDGE, CHANDIGARH, UNDER WHICH D IRECTIONS WERE SOUGHT FROM THE COURT TO DIRECT THE SELLER TO OBTAI N PERMISSION TO SELL FROM THE ESTATE OFFICER FOR EXECUTION AND REGISTRAT ION OF SALE DEED IN FAVOUR OF THE ASSESSEE. AS PER THE COPY OF THE PL AINT, THE AGREEMENT WAS FOR A CONSIDERATION OF RS.50 LACS ONLY. THE CI T (APPEALS) THUS OBSERVED THAT FROM THIS TWO THINGS BECOME CLEAR. FIRST IS THAT TH E AGREEMENT WAS FOR A CONSIDERATION OF RS. 50 LAC ONL Y AND THAT THIS FACT WAS DULY STATED IN THE DOCUMENTS FILED IN THE CIVIL COURT AS WELL BEFORE THE DATE OF SEARCH. SECONDLY, THIS PROPERTY WAS AGREED TO BE SOLD TO THE APPELLANT FOR A CONSIDERATION WHICH WAS APPARENTLY LOWER THAN THE FAIR MARKET VALUE OF THAT PROPERTY. IT IS SO BECAUSE ONLY UNDER SUCH CONDITIONS THE SELLER WOULD BE INTERESTED IN N OT EXECUTING SUCH AGREEMENT AND HE WOULD RATHER BE EXPLORING IF THE S ALES COULD BE MADE TO SOMEBODY ELSE AT THE MARKET PRICE. FROM THE ABOV E, THE CONTENTION OF THE ID. COUNSEL THAT THE CONSIDERATION PAID BY T HE APPELLANT FOR THE PURCHASE OF THE PROPERTY MIGHT BE LOWER THAN THE FA IR MARKET VALUE ETC., APPEARS TO BE QUITE JUSTIFIED. THEREFORE, THO UGH THE MARKET VALUE OF THE PROPERTY COULD BE MORE THAN RS.50 LAC, THE C LAIM OF THE 8 APPELLANT HAVING PURCHASED THE PROPERTY FOR AN AMOU NT OF RS.50 LAC APPEARS TO BE CORRECT . ANOTHER FACTOR NOTED BY THE CIT (APPEALS) WAS THAT THOUGH THE ASSESSMENT OF THE SELLER I.E. SEPL HAD BEEN COMPLETED BY THE SAME ASSESSING OFFICER BUT NO ADDITION ON AC COUNT OF SUCH ALLEGED ON MONEY ON THE SALE OF THE PROPERTY HAD BE EN MADE IN ITS HAND FOR THE SAME ASSESSMENT YEAR. SIMILARLY NO AD DITION WAS MADE IN THE CASE OF SHRI MUKESH MITTAL AND SMT.ALKA MITTAL FOR ASSESSMENT YEAR 2002-03 IN ORDER PASSED UNDER SECTION 143(3) O F THE ACT THE CIT (APPEALS) THUS HELD THAT THE A.O. CANNOT BE SAID TO BE JUSTIFIED IN CONSIDERING THE PURCHASE CONSIDERATION OF THE SAME PROPERTY IN THE HANDS OF APPELLANT AT RS.1 CRORE AND THE SALE PRICE IN THE HANDS OF THE SELLER AT RS.50 LACS . ANOTHER FACTOR WHICH WAS HIGHLIGHTED BY THE ASSESSEE WAS THAT THE AREA OF 600 SQ.FT. HAD TO BE LEFT AS NON- CONSTRUCTION AND THE AREA FALLING TO THE SHARE OF T HE ASSESSEE WORKED OUT TO RS.5400 SQ.YDS. AS AGAINST 6125 SQ.YD. CONSI DERED BY THE ASSESSING OFFICER AND IF THE CORRECT AREA OF 5400 S Q.YD. WAS CONSIDERED THEN THE CONSIDERATION PAID BY THE ASSES SEE WORKED OUT CLOSER TO THE CONSIDERATION PAID FOR OTHER PART OF THE PLOT. THE CIT (APPEALS) AGREED WITH THE OBSERVATIONS OF THE ASSES SING OFFICER THAT ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE. HOWEVER, IN VIEW OF THE F ACTUAL POSITION CONSIDERED AND DISCUSSED BY THE CIT (APPEALS), IT W AS HELD THAT IN THE FACE OF THE FACTUAL POSITION DISCUSSED ABOVE, IT CA NNOT BE CONCLUDED THAT THERE WERE ANY CONCLUSIVE CIRCUMSTANTIAL EVIDE NCE JUSTIFYING THE INFERENCE THAT ANY ON MONEY WAS PAID BY THE ASSESSE E FOR THE PURCHASE OF THE SAID PROPERTY. THE CIT (APPEALS) THUS HELD THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE B ASIS OF EVIDENCE. 9. THE NEXT ASPECT CONSIDERED BY THE CIT (APPEALS) WAS THE VALUATION REPORT FOUND FROM THE PREMISES OF THE ASS ESSEE. IT WAS 9 OBSERVED THAT THE ASSESSING OFFICER HIMSELF HAD ACCEPTED THE CONTENTION OF THE APPELLANT THAT THE VALUE OF THE P ORTION OF PLOT WAS LOWER ON ACCOUNT OF THE SAME NOT BEING ON THE FRONT WAS CORRECT AND THAT THE VALUATION MENTIONED IN THE REPORT AS ABOVE WAS TAKEN FOR THE BANK PURPOSES ONLY . HOWEVER, THE VALUATION WAS MADE ON 16.7.2004 WHEREAS THE PROPERTY WAS PURCHASED VIDE AGREEMENT D ATED 21.12.2001. THEREFORE, ON THE BASIS OF SUCH VALUATION WHICH ADM ITTEDLY WAS FOR BANK PURPOSES, IT COULD NOT BE CONCLUDED THAT THE P URCHASE CONSIDERATION FOR THE PLOT OF LAND WAS RS.1 CRORE. IN VIEW THEREOF, IT WAS HELD BY THE CIT (APPEALS) THAT THERE WAS NO CAS E FOR MAKING ADDITION OF RS.16,66,666/- IN THE HANDS OF THE ASSE SSEE ON ACCOUNT OF ON MONEY PAID FOR PURCHASE OF PART OF THE PROPERTY IN PLOT NO.70, INDUSTRIAL AREA, CHANDIGARH. THE ADDITION MADE BY THE ASSESSING OFFICER WAS THUS DELETED. 10. THE REVENUE IS IN APPEAL AGAINST THE SAME. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE DEPARTMENT HAS FIL ED APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 18(4) O F INCOME TAX APPELLATE TRIBUNAL RULES DATED 2.9.2005. IT WAS P OINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT THE EVIDENCES WER E ALREADY AVAILABLE ON RECORD AND TO FACILITATE THE PROCEEDINGS, THE SA ID EVIDENCES WERE BEING FILED. THE LEARNED D.R. FOR THE REVENUE FURT HER SUBMITTED THAT THE ADDITIONAL EVIDENCE FILED UNDER RULE 29 OF ITAT RULES IS NOT BEING PRESSED. OUR ATTENTION WAS DRAWN TO THE PAGE 26 O F THE PAPER BOOK WHERE COPY OF AGREEMENT TO SELL EXECUTED BETWEEN SE PL AND THE ASSESSEE BEFORE US IS PLACED AT PAGES 1 TO 6 OF THE PAPER BOOK. THE SAID AGREEMENT TO SELL WAS FOUND FROM THE COMPUTER OF SHRI MUKESH MITTAL EVIDENCING SALE CONSIDERATION OF RS.1 CRORE. COPY OF THE SALE DEED EXECUTED BETWEEN THE PARTIES FOR PURCHASE OF T HE SAID SHARE IN THE SAID PROPERTY IS ENCLOSED AT PAGES 7 TO 21 OF THE P APER BOOK, WHICH IS 10 ALSO ENCLOSED BY THE ASSESSEE AT PAGES 24 TO 45 OF ITS PAPER BOOK. THE NEXT DOCUMENT BEING PART OF THE ADDITIONAL EVID ENCE IS THE VALUATION REPORT OF 27% SHARE IN PLOT NO.70, INDUS TRIAL AREA, PHASE- I, CHANDIGARH, WHICH IS PLACED AT PAGES 22 AND 23 O F THE PAPER BOOK. IT WAS CONFRONTED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND BY WAY OF SHOW NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT WHICH IN TURN IS PLACED AT PAGES 24 TO 26 O F THE PAPER BOOK. THE LEARNED D.R. FOR THE REVENUE STRESSED THAT ALL THESE EVIDENCES ARE ACTUALLY NOT ADDITIONAL EVIDENCES BEFORE US BUT EVI DENCE ALREADY AVAILABLE ON RECORD, WHICH WERE CONFRONTED TO THE A SSESSEE BEFORE CONCLUSION OF ASSESSMENT PROCEEDINGS. THE LEARNED D.R. FOR THE REVENUE FURTHER PLACED RELIANCE ON THE PAPER BOOK F ILED CONSISTING OF 40 PAGES. THE DOCUMENT AT PAGE NO.1 OF THE SAID PA PER BOOK WAS THE HAND WRITTEN DOCUMENT FOUND FROM THE RESIDENCE OF M R.R.K.OHRI, WHICH WAS SEIZED AND WAS AVAILABLE AT PAGE NO.7 OF ANNEXURE-1. THE SAID DOCUMENT ENLISTED THE TERMS OF PAYMENT OF RP 1 20 AND IND 70 I.E. THE PROPERTY IN QUESTION. IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT THE DOCUMENTS PLACED AT SR.NOS .2 TO 8 WERE NOT RELEVANT TO THE ASSESSEE AND THE DOCUMENT PLACED AT SR.NOS.9 AND 10 ENLISTED THE FACTS OF THE CASE WHICH WAS ACTUALLY P ART OF THE APPRAISAL REPORT PREPARED BY THE INVESTIGATION WING. 11. THE LEARNED A.R. FOR THE ASSESSEE VEHEMENTLY OP POSED THE ADMISSION OF THE ADDITIONAL EVIDENCE AND POINTED OU T THAT PAGE NO.1 OF THE PAPER BOOK FILED BY THE ASSESSEE DID NOT RELATE TO THE ASSESSEE AS THE ASSESSEE HAD PURCHASED HIS SHARE OF THE PROPERT Y DURING THE YEARS PRIOR TO THE SEARCH. THE LEARNED A.R. FOR THE ASS ESSEE FURTHER POINTED OUT THAT THE REVENUE BY WAY OF SUBMISSION OF ADDITI ONAL EVIDENCE UNDER RULE 18(4) OF THE ACT ITAT RULES HAS PUT DOWN THE FACTS OF THE CASE BUT THE LAST PART OF SUBMITTING CERTAIN DOCUME NTS AND EVIDENCES IN 11 TURN POINTS TO THE FACT THAT THE ASSESSING OFFICER WANTS TO IMPROVE UPON ITS CASE AND THE REVENUE CANNOT BE ALLOWED TO DO SO. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE TH AT AT THIS JUNCTURE WHEN THE APPELLATE PROCEEDINGS ARE IN CONTINUATION OF ASSESSMENT PROCEEDINGS, THE DOCUMENTS WHICH ARE CONNECTED WITH THE FACTUAL ASPECT OF THE CASE CAN BE CONSIDERED. 12. THE LEARNED D.R. FOR THE REVENUE, HOWEVER, POIN TED OUT THAT THE TRIBUNAL HAD WIDE POWERS AS LAID DOWN BY THE SUPREM E COURT IN CIT VS. KANPUR COAL SYNDICATE [53 ITR 225 (SC)] AND IN PATNAIK & CO. LTD. VS. CIT [161 ITR 365 (SC)]. IT WAS FURTHER PO INTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT ALL THE SO CALLED ADDITIONAL EVIDENCES WERE PART OF THE RECORDS AND THE CASES WE RE CENTRALIZED AND ALL THE DOCUMENTS WERE TO BE CONSIDERED BY THE TRIB UNAL AS IT IS THE FINAL FACT FINDING BODY. IT WAS EXPLAINED BY THE L EARNED D.R. FOR THE REVENUE THAT PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH WAS OWNED BY TWO GROUPS OF FAMILY I.E. SHRI R.K. OHRI H AD 50% SHARE AND MRS. ERA OHRI AND DAUGHTERS HAD 50% SHARE. ONE SHR I MUKESH MITTAL, ADVOCATE WAS HANDLING THEIR CIVIL LITIGATIONS AND H E PROPOSED OUT OF COURT SETTLEMENT UNDER WHICH THE PROPERTY WAS PURCH ASED BY SHRI MUKESH MITTAL OR SEPL THROUGH HIS WIFE AND IN TURN WAS SOLD TO THE FINAL PURCHASERS. THE SHARE OF SMT. ERA OHRI AND H ER DAUGHTERS WAS SOLD BY M/S SEPL FOR RS.50 LACS TO THREE ASSESSEES BEFORE US (23& SHARE)AND OTHER SHARE WAS SOLD FOR RS.80 LACS OF S/ SHRI VIVEK MOHAN MITTAL AND HIS FAMILY MEMBERS (27% SHARE). THE SHA RE OF SHRI R.K. OHRI WAS SOLD BY SEPL FOR RS.70 LACS TO M/S VISHNU ASSOCIATES LTD. (23% SHARE) AND RS.90 LACS TO SHRI RAJESH GUPTA AND HIS FAMILY (27% SHARE). THE TOTAL SALE CONSIDERATION RECEIVED FOR DIFFERENT TRANSACTIONS WAS RS.2.90 CRORES AS AGAINST THE SALE CONSIDERATIO N OF RS.3.20 CRORES DECLARED BY SMT.ERA OHRI AND RS.2.45 CRORES DECLARE D BY SHRI 12 R.K.OHRI. SEARCH OPERATIONS ON 3.9.2004 ON SHRI MU KESH MITTAL AND HIS WIFE AND OTHER CONCERNS AND ALSO ON THE PURCHAS ERS WERE CONDUCTED. THE STATEMENT OF SMT.ERA OHRI WAS RECOR DED ON 8.10.2004, COPY OF WHICH WAS FILED BEFORE US DURING THE COURSE OF HEARING. SMT.ERA OHRI AGREED TO SELL THE PROPERTY FOR RS.3.2 0 CRORES. THE SAID SALE WAS MADE TO SHRI MUKESH MITTAL OR SEPL AND WHO IN TURN SOLD THEIR SHARE TO THREE ASSESSEES BEFORE US. IN THE F IRST ROUND OF SALE ALL PAYMENTS TO SMT.ERA OHRI WERE MADE THROUGH CHEQUES AND LATER THE SAME PROPERTY WAS SOLD FOR RS.50 LACS AND RS.80 LAC S TO TWO DIFFERENT FAMILIES. IT WAS POINTED OUT BY THE LEARNED D.R. F OR THE REVENUE THAT SMT.ERA OHRI HAD ONLY EXECUTED THE GPA/SPA BUT NO S ALE DEED WAS EXECUTED BY SMT.ERA OHRI. OUR ATTENTION WAS DRAWN TO THE AGREEMENT TO SELL DATED 21.12.2001 IN RESPECT OF 27% SHARE IN THE SAID PROPERTY SOLD BY SEPL TO THE ASSESSEE. AT PAGE NOS. 21 TO 2 4 OF THE PAPER BOOK IN WHICH SEPL STATED THAT IT IS AGREED TO SELL 27% OF THE SAID PROPERTY, DOES NOT MAKE IT THE OWNER OF THE PROPERT Y. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE PAYMENT O F RS.7 LACS EACH WAS MADE BY EACH OF THE THREE PURCHASERS OF THE SAI D SHARE IN THE PROPERTY AS IS EVIDENT IN THE SAID AGREEMENT TO SEL L AND SIMILAR CHEQUES WERE HANDED OVER TO SMT.ERA OHRI WHICH SHOW S THAT THE ASSESSEE WAS AWARE OF THE DEAL BETWEEN SMT.ERA OHRI AND SHRI MUKESH MITTAL OF RS.3.20 CRORES. IT WAS FURTHER POINTED O UT BY THE LEARNED D.R. FOR THE REVENUE THAT AT THE SAME TIME, CASH WA S ROUTED THROUGH M/S MORINDA OVERSEAS WHICH WAS USED AS CONDUIT BY S HRI MUKESH MITTAL AND ADDITIONS OF RS.1 CRORE WAS MADE IN THE HANDS OF SHRI MUKESH MITTAL. THE SAID ADDITIONS WERE DELETED BY THE TRIBUNAL IN THE HANDS OF SHRI MUKESH MITTAL IN ITA NOS.407 TO 412/C HANDI/2008 AND THE COPY OF THE SAID ORDER IS PLACED AT PAGES 65 TO 89 OF ASSESSEES PAPER BOOK. THE LEARNED D.R. FOR THE REVENUE PLAC ED RELIANCE ON THE 13 DECISION OF HON'BLE SUPREME COURT IN CIT VS. DURGA PRASAD MORE [82 ITR 540(SC)] AND IN SUMATI DAYAL VS. CIT [214 ITR 8 01 (SC)] FOR THE PROPOSITION THAT THE VIEW HAS TO BE TAKEN AFTER CON SIDERING THE COMPLETE EVIDENCE AVAILABLE AGAINST THE ASSESSEE. 13. THE NEXT ASPECT POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE WAS THAT THE DETAILS OF PAYMENTS AS MENTIONED IN TH E AGREEMENT TO SELL EXECUTED RELIED UPON BY THE ASSESSEE AND DETAILS OF PAYMENTS IN THE AGREEMENT TO SELL FOUND FROM THE COMPUTER OF SHRI M UKESH MITTAL WERE IDENTICAL THOUGH THE SALE CONSIDERATION IN THE AGRE EMENT TO SELL FOUND FROM THE COMPUTER WAS RS.1 CRORE. IT WAS STRESSED BY THE LEARNED D.R. FOR THE REVENUE THAT ON COMPARISON OF THE TWO AGREE MENTS TO SELL, THE TERMS AND CONDITIONS WERE FOUND TO BE IDENTICAL EVE N THE RECEIPT OF MONEY WAS IDENTICAL EXCEPT THE SALE CONSIDERATION W HICH WAS RS.1 CRORE IN THE AGREEMENT FOUND FROM THE COMPUTER OF S HRI MUKESH MITTAL AND RS.50 LACS IN THE REGISTERED DOCUMENTS BETWEEN THE PARTIES. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE C IT (APPEALS) AT PAGE 17 HAS BRUSHED ASIDE THE SAID DOCUMENTS HOLDIN G THAT THE SAME WERE NOT SIGNED AND NOT IN THE HANDWRITING OF THE A SSESSEE AND HENCE NOT RELIABLE. IT WAS PUT TO THE LEARNED D.R. FOR T HE REVENUE BY THE BENCH WHETHER ANY ADDITIONS WERE MADE IN THE HANDS OF SEPL, SHRI MUKESH MITTAL OR HIS WIFE SMT.ALKA MITTAL, WHO WERE THE DIRECTORS OF SEPL. THE LEARNED D.R. FOR THE REVENUE FAIRLY ADMI TTED THAT NO SUCH ADDITION WAS MADE IN THEIR HANDS. 14. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE ORDER OF THE CIT (APPEALS) WAS NOT CORRECT IN DELETING THE S AID ADDITION. IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THA T EVEN IF DOCUMENTARY EVIDENCE WAS NOT FOUND, CIRCUMSTANTIAL EVIDENCE HAD TO BE CONSIDERED TO DECIDE THE ISSUE. THE CIT (APPEAL S) HAD ALLOWED THE 14 RELIEF AS NO DOCUMENT WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE. HE FURTHER STATED THAT IN VIEW OF CONTRARY FACTS, T HE CORRECT COURSE OF ACTION WOULD BE TO DIRECT THE ASSESSING OFFICER TO CONDUCT ENQUIRIES OR ATLEAST TO CALL FOR REMAND REPORT. THE NEXT OBJECT ION RAISED BY THE LEARNED D.R. FOR THE REVENUE WAS THAT THE CIT (APPE ALS) IN THE ORDER STATES THAT ALL PURCHASERS WERE SUBJECT TO INTERROG ATION AND THEY DENIED ANY PAYMENT OF ON MONEY AND THE SAME WAS ACCEPTED B Y THE CIT (APPEALS) WITHOUT ANY ENQUIRY. THE EVIDENCE AGAINS T THE ASSESSEE CLEARLY ESTABLISHED THAT THE ASSESSEE WAS AWARE THA T SHRI MUKESH MITTAL OR SMT.ALKA MITTAL AS THE CASE MAY BE, HAD P URCHASED THE SAID PROPERTY FOR RS.3.20 CRORES AND IT WAS BEING SOLD A T LESSER PRICE TO THE SAID PARTY. FURTHER THE ORDER PASSED IN THE CASE O F SHRI MUKESH MITTAL COULD NOT BE USED TO COME TO THE FINDINGS THAT ON M ONEY WAS NOT PAID IN THE SAID DEAL AS CIRCUMSTANTIAL EVIDENCE POINTS TO THE OTHER CONCLUSION WHEREIN A PLOT BOUGHT FOR RS.3.20 CRORES WAS SOLD FOR RS.1.30 CRORES (RS.50 LACS (23%) SHARE + RS.80 LACS (27% SHARE). 15. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THE ASSESSING OFFICER AT PAGE 1 OF THE ASSESSMENT ORDER HAD ACKNO WLEDGED THAT THE ASSESSEE HAD PURCHASED THE SAID SHARE IN THE PROPER TY JOINTLY FROM M/S SEPL AND NO ADDITION HAS BEEN MADE IN THE HANDS OF SEPL, SMT.ALKA MITTAL OR SHRI MUKESH MITTAL FOR SALE OF SAID SHARE IN THE PROPERTY. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT WHETHER ENTITIES OR SEPL CLAIMED ANY LOSS ON SALE O F THE SAID PROPERTY WAS NOT THE BUSINESS OF THE ASSESSEE AND THE SALE P RICE ON EACH SALE DEED EXECUTED, MERITS TO BE ADOPTED IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER POINTED OUT THAT THERE WERE CERTAIN DIS PUTES BETWEEN THE PARTIES AND CIVIL CASE WAS FILED BY THE ASSESSEE AG AINST SEPL AND THEREAFTER THERE WAS SEARCH UPON THE ASSESSEE ON 3. 9.2004. OUR ATTENTION WAS DRAWN TO THE COPY OF THE SUIT FILED W HICH IS PLACED AT 15 PAGES 44 AND 45 OF THE PAPER BOOK FILED BY THE ASSE SSEE. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE TH AT THE AGREEMENT TO PURCHASE THE SAID PROPERTY BETWEEN THE PARTIES WAS EXECUTED MUCH BEFORE THE SEARCH OPERATION. THE AGREEMENT TO SELL WAS EXECUTED ON 21.12.2001 AND THE SALE DEED WAS EXECUTED ON 9.12.2 002 AND IT WAS STATED BY THE LEARNED A.R. FOR THE ASSESSEE THAT AT THE TIME OF EXECUTION OF THE SALE DEED THE ASSESSEE WAS NOT AWA RE AS TO THE PRICE AT WHICH THE SELLER HAD PURCHASED THE SAID PROPERTY . IN RESPECT OF THE AGREEMENT TO SELL FOUND FROM THE COMPUTER OF SHRI M UKESH MITTAL, IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSE E THAT THE THIRD PARTY EVIDENCE WHICH WAS NOT SIGNED, COULD NOT BE U SED AGAINST THE ASSESSEE TO MAKE THE AFORESAID ADDITION. THE LEARN ED A.R. FOR THE ASSESSEE FURTHER SUBMITTED THAT THE SOME CORROBORAT IVE EVIDENCE SHOULD WITH THE DEPARTMENT TO PRESUME THAT THE SALE CONSID ERATION WAS HIGHER THAN AS RECORDED IN THE SALE DEED. THE LEARNED A.R . FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPR EME COURT IN 131 ITR 597 (SC) FOR THE PROPOSITION THAT WHERE NO DOCU MENT WAS FOUND, IT COULD NOT LEAD TO THE CONCLUSION THAT ANY OWN MONEY WAS PAID. FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN PARAMJIT SINGH VS. ITO [323 I TR 588 (P&H)], IN PANKAJ DAHYABHAI PATEL (HUF) VS. ACIT, (1999) 63 TTJ (AHD) 790 AND M.M.FINANCIERS (P) LTD. VS. DCIT (2007) 107 TTJ (CHENNAI) 200, 16. THE LEARNED D.R. FOR THE REVENUE IN REJOINDER P LACED RELIANCE ON CIT VS. INDEO AIRWAYS (P) LTD. (2012) 210 TAXMAN 21 3 (DEL) AND IN THE CASE OF ITO VS. M.PIRAI CHOODI, 334 ITR 262 (SC ). 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE ADJUDICATING THE ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS, WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE . THE CAPTIONED 16 APPEALS IS IN RELATION TO THE PROPERTY NO.70, INDUS TRIAL AREA, PHASE-1, CHANDIGARH. THE SAID PROPERTY WAS JOINTLY OWNED BY SHRI R.K.OHRI S/O LATE SHRI DWARKA NATH AND SMT.ERA OHRI DAUGHTER -IN-LAW OF SHRI DWARKA NATH AND HER TWO DAUGHTERS. THERE WERE CERT AIN LITIGATIONS BETWEEN THE TWO PARTIES ON ACCOUNT OF PROPERTY DISP UTE VIS--VIS PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGAR H AND HOUSE NO.342, SECTOR 9-D, CHANDIGARH. THE CASES REGARDIN G SETTLEMENT OF ESTATE OF LATE SHRI DWARKA NATH WERE PENDING IN CIV IL COURT AND BEFORE THE DECISION OF THE CIVIL SUIT, ONE ADVOCATE SHRI MUKESH MITTAL, WHO WAS HANDLING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND ASKED IN OCTOBER, 2002 WHETHER HE WAS INTERESTE D IN OUT OF COURT SETTLEMENT. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT IN ANOTHER PROPERTY I .E. HOUSE NO.342, SECTOR 9-D, CHANDIGARH FOR CERTAIN CONSIDERATION. IN ORDER TO TAKE COMPLETE OWNERSHIP OF HOUSE NO.342, SECTOR 9, CHAND IGARH, HE INFORMED SHRI MUKESH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE. SHRI MUKESH MITTAL THROUGH ENTITY NAMED M/S SHARVILA ESTATES PVT. LTD. ENTERED INTO AN AGREEMENT WITH SHRI R.K,O HRI FOR SALE OF HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHAN DIGARH FOR TOTAL CONSIDERATION OF RS.2.25 CRORES. 18. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALONGWITH THE SHA RE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDUSTRIAL AREA, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORES. ON 18.6.2001 ADVA NCE PAYMENT OF RS.30 LACS WAS GIVEN TO THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXECUTED BETWEEN SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL, DIRECTOR OF M/S SEPL, ON THE 17 OTHER SIDE. THE SAID PROPERTY THEREAFTER WAS FIN ALLY SOLD TO FOUR GROUPS OF PERSONS NAMAELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU A SSOCIATES LTD.), 184, INDL. AREA, PHASE-I, CHANDIGARH (RESIDE NCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA, AJAY KR. GUP TA AND VIJAY KR. GUPTA IS H.NO.3007, SECTOR 19-D, CHANDIGARH) (23% SHARE OF PLOT WHOSE TOTAL SIZE IS AROUND 20000 SQ.Y DS.) 2. SH. RAJESH GUPTA, SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA, SMT. VEENU GUPTA W/O SH. YO GESH GUPTA, ALL RESIDENTS OF H.NO.1216, SECTOR 19-B, CHANDIGARH (27% SHARE OF PLOT). 3. SH. NARINDER MOHAN MITTAL HUF, SH. SURINDER MOHAN MITTAL HUF, SH. JATINDER MOHAN MITTAL HUF THROUGH ABOVE THREE KARTA S WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.389, SECTOR 30, CHAN DIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL, SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL, RESIDEN T OF H.NO. 123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21-D, CHANDI GARH (23% SHARE OF PLOT). 19. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA, SPA AND WILL F ROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHR I, HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF M/S SEPL DATED 1 8.6.2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES, AGAINST WHICH EARN EST MONEY OF RS.30 LACS WAS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGNED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2.90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WHICH EARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS R EGISTERED IN THE NAME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKESH MITTA L AND SHRI VIVEK MOHAN MITTAL, COUSIN OF SHRI MUKESH MITTAL BOTH SHO WN AS RESIDENTS OF 1526, SECTOR 18-D, CHANDIGARH. THE WILL WAS REG ISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHE RS PURCHASED 23% SHARE OF THE SAID PROPERTY FOR RS.80 LACS AND SHRI NARINDER MOHAN MITTAL, HUF & OTHERS PURCHASED 27% SHARE OF THE SAI D PROPERTY FOR 18 ANOTHER RS.50 LACS. THE SHARE OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI SURINDER MITTAL, JITENDER MOHAN MITTAL HUF A ND NARINDER MOHAN MITTAL HUF IN JOINT FROM SHRI MUKESH MITTAL T HROUGH M/S SEPL FOR RS.50 LACS. THE BALANCE 23% SHARE IN THE SAID PROPERTY BELONGING TO THE SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED FOR RS.80 LACS VIDE SEPARATE SALE DEED BY SHRI VIVEK MO HAN MITTAL & OTHERS. 20. THE OTHER 50% SHARE OF THE SAID PLOT OWNED BY S HRI R.K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHARE IN THE SAID PROPERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI, WHO IN TURN CLAIMED TO HAVE SOLD TO M/S VISHNU ASSOCIATES LTD.(NOW VALC O INDUSTRIES LTD.), S/SHRI ASHWANI KUMAR GUPTA, AJAY KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE AGREEMENT TO SELL BETWEEN SHRI R. K,.OHRI AND SHRI ANIL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY WAS EXECUTED ON 1.4.2003. THE ORIGINAL AGREEMENT TO SE LL WAS SEIZED FROM THE RESIDENCE OF SHRI R.K.OHRI AND WAS MARKED AS PA GES 73 TO 76 OF ANNEXURE-A/342, SECTOR 9, CHANDIGARH. AS PER THE SAID AGREEMENT TOTAL SALE PRICE PAID TO SHRI R.K,OHRI WAS RS.1.45 CRORES. ON THE DATE OF EXECUTION OF SALE I.E. 1.4.2003 GPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA AND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTER ED ON 1.4.2003. IN RESPECT OF THE SAID 23% SHARE OF THE SAID PROPER TY, SALE DEED WAS REGISTERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROU GH SHRI AJAY KUMAR GUPTA, DIRECTOR AND SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED TH E SALE CONSIDERATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAID BY WAY OF THREE DIFFERENT CHEDQUES I.E. RS.5 LACS V IDE CHEQUE DATED 19 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS VIDE VHEQUE DATED 2.4.2003. 21. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS, NAMELY S/SHRI RAJESH GUPT A, YOGESH GUPTA, SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND SMT.VEEN A GUPTA W/O SHRI YOGESH GUPTA, ALL RESIDENTS OF HOUSE NO.12, SE CTOR 19B, CHANDIGARH. THE AGREEMENT TO SELL WAS SIGNED BETW EEN SHRI R,K.OHRI AND ALL THE FOUR PURCHASERS ON 1.4.2003 FOR SALE CO NSIDERATION OF RS.90 LACS. THE ASSESSEE PAID RS.1 LAC BY DIFFERENT FOU R CHEQUES EACH DATED 23.12.2002 AND THEN PAID RS.21.50 LACS BY FOUR DIFF ERENT CHEQUES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANUP GUPTA S/O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SHRI R.K.OHRI TO ALL THE FOUR PERSONS ON 1.4.2003 AND TH E SALE DEED WAS REGISTERED ON 2.4.2003 BETWEEN SHRI R.K.OHRI THROUG H SHRI ANUP GUPTA, GPA I.E. SON OF ONE OF THE PURCHASER AND ALL THE FOUR PURCHASERS. 22. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIONSWER E GROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SHRI R.K.OHRI, NARINDER MO HAN MITTAL GROUP, VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWITH SEARCH AGAINST SHRI MUKESH MITTAL AND OTHERS. DURING THE SEARCH OPERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND A ND AS PER THE SAID PAPER TOTAL SALE CONSIDERATION FOR SALE OF PLOT NO. 70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3,24,56,000/- WHICH WAS SPLITTED IN CASH/DD OF RS.2.25 CRORES AND CASH OF RS.99.56 LACS. THIS PAPER FURTHER CONTAINED THE DETAILS OF PAYMENT TO SMT.ERA OHRI AND OTHERS FOR PURCHASE OF HOUSE NO.342, SECTO R 9, CHANDIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS. 80 LACS WERE TO 20 BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WA S RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT T HE SAID PAPER WAS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGA RDING CHEQUE/DD AS CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH INVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE PO SSESSION OF SHRI R.K.OHRI SHOWED THAT 50% SHARE OF SHRI R.K.OHRI WAS AGREED TO BE PURCHASED BY M/S SEPL FOR RS.3.24 CRORES. ON THE O THER HAND, SMT.ERA OHRI AND HER DAUGHTERS SOLD 50% SHARE IN T HE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.3.20 CRORES BY CHEQUE . AS AGAINST THE PURCHASE CONSIDERATION OF RS.6,44,56,000/- THE SHAR E OF SALE CONSIDERATION PAID TO SMT.ERA OHRI WAS RS.3.20 CROR ES AND TO SHRI R.K.OHRI WAS RS.3,24,56,000/-, BY M/S SEPL. THE DE CLARED SALE CONSIDERATION BY DIFFERENT PARTIES AGAINST THE PURC HASE OF RESPECTIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CROR ES ONLY, THE BREAK UP OF WHICH WAS AS UNDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL, ARVIND MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VASUNDRA MIT TAL W/O ARVIND MITTAL R/O 123, SEC-21A, CHANDIGARH FOR DECLARED CONSI DERATION OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL, SURINDER MOHA N MITTAL, JATINDER MOHAN MITTAL R/O 389, SEC-30, CHANDIGARH FOR DECLARED CONSIDERAT ION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007, SEC-19D, CHANDIGARH FOR DECLARED CONSIDERATION OF R S. 70 LACS. II) 27% PURCHASED BY SH. RAJESH GUPTA, YOGESH GUPTA , NEELAM GUPTA W/O RAJESH GUPTA, VEENU GUPTA W/O YOGESH GUPTA R/O 1216, SEC-1 9B, FOR DECLARED CONSIDERATION OF RS. 90 LACS. 23. THE CASE OF THE REVENUE WAS THAT THE PURCHASE C ONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORES. HOWEVER, T HE ADMITTED CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I.E. RS.3.20 CRORE S BY SMT.ERA OHRI 21 AND RS.2.25 CRORES BY SHRI R.K.OHRI AS AGAINST THE DECLARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CRORES TO ULTIMATE BUYERS. 24. THE FIRST ISSUE BEFORE US IS IN RELATION TO THE ADDITIONAL EVIDENCE FILED BY THE REVENUE. THE LEARNED D.R. FOR THE REV ENUE POINTED OUT THAT THE ADDITIONAL EVIDENCE FILED VIDE APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES IS NOT PRE SSED. HOWEVER, THE ADDITIONAL EVIDENCE FILED UNDER RULE 18(4) WAS PRESSED BY THE LEARNED D.R. FOR THE REVENUE FOR ADMISSION. IT WAS POINTED OUT BY HIM THAT THE EVIDENCE WAS ALREADY AVAILABLE. OUR ATTE NTION WAS DRAWN TO THE PAPER BOOK CONSISTING OF 26 PAGES IN WHICH SR.N O.1 WAS THE AGREEMENT TO SELL WITH SHRI NARINDER MOHAN, HUF DAT ED 21.12.2001 PLACED AT PAGES 1 TO 6. IT WAS STATED BY THE LEARN ED D.R. FOR THE REVENUE THAT THE SAID AGREEMENT TO SELL WAS FOUND F ROM THE COMPUTER OF SHRI MUKESH MITTAL AND WAS RELEVANT TO THE PROCE EDINGS. THE SALE DEED DATED 9.12.2002 EXECUTED BETWEEN SMT.ERA OHRI AND SHRI NARINDER MOHAN MITTAL, HUF PLACED AT PAGES 17 TO 21 WAS THE DOCUMENTS EXECUTED BETWEEN THE PARTIES. THE DOCUME NT AT SR..NO.3 OF THE VALUATION REPORT OF 27% SHARE OF THE PROPERTY W HICH WAS FOUND FROM THE POSSESSION OF THE ASSESSEE PLACED AT PAGES 21 TO 23 OF THE PAPER BOOK. THE LAST WAS THE NOTICE ISSUED UNDER S ECTION 142(1) OF THE ACT ISSUED IN THE CASE OF ONE OF THE ASSESSEE B EFORE US PLACED AT PAGES 24 TO 26 OF THE PAPER BOOK. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT BY WAY OF THE INFORMATION FILED UN DER RULE 18(4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, THE ASSESS ING OFFICER WANTS TO IMPROVE UPON ITS CASE AND THE SAME IS NOT ALLOWE D. HOWEVER, THE COPY OF THE SALE DEED PLACED AT SR.NO.2 AND AT SR.N O.3 THE VALUATION REPORT AND AT SR.NO.4 THE NOTICE ISSUED TO ONE OF T HE ASSESSEE, WERE THE MATTERS OF RECORD. IN RESPECT OF SR.NO.1 THE L EARNED A.R. FOR THE ASSESSEE OBJECTED TO ITS ADMISSION BUT THE SAME WAS CONFRONTED TO THE 22 ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND HENC E THE SAME CANNOT BE HELD TO BE ADDITIONAL EVIDENCE. ANOTHER PAPER BOOK OF 40 PAGES WAS FILED BY THE LEARNED D.R. FOR THE REVENUE AND D OCUMENTS AT SERIAL NUMBERS CONSISTED OF PAYMENT OF RP120 AND IND70 IN THE HAND WRITING OF SHRI R.K.OHRI. IT WAS FOUND FROM HIS POSSESSION AT HIS RESIDENCE. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE PAGE AT SR.NO.1 DO NOT RELATE TO THE ASSESSEE AS THE PROPERTY WAS P URCHASED DURING THE YEAR PRIOR TO THE DATE OF SEARCH AND CANNOT BE ADMI TTED IN THE HANDS OF THE ASSESSEE. THE LEARNED D.R. FOR THE REVENUE POI NTED OUT THAT THE DOCUMENTS AT SR.NOS.2 TO 8 DID NOT RELATE TO THE AS SESSEE AND THE DOCUMENT AT SR.NOS.9 AND 10 WERE THE FACTS OF THE C ASE. IN VIEW OF THE ADMISSION OF THE LEARNED D.R. FOR THE REVENUE THE D OCUMENTS AT SR.NO.2 TO 8 BEING NOT RELATABLE TO THE ASSESSEE AR E NOT BEING CONSIDERED AND THE DOCUMENTS AT SR.NOS.9 AND 10 ARE REJECTED AS THESE ARE PART OF SOME APPRAISAL REPORT AND WE FIND NO ME RIT IN THE SAID DOCUMENTS AND THE SAME ARE NOT ADMITTED AS ADDITION AL EVIDENCE. HOWEVER DOCUMENT AT SR. NO. 1 WAS CONFRONTED TO THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AND THE SAME IS ADMITTED. TH E REVENUE HAS FILED ON RECORD STATEMENT OF SMT.ERA OHRI RECORDED ON 8.10.2004 PURSUANT TO THE SEARCH CARRIED OUT ON THE PREMISES OF VARIOUS PERSONS CONNECTED TO THE SALE AND PURCHASE OF THE SAID PROP ERTY. THE ASSESSEE, ON THE OTHER HAND, HAS ALSO FILED PAPER BOOK IN WHI CH HE HAS PLACED ON RECORD THE COPY OF THE AGREEMENT TO SELL DATED 21.1 2.2001 EXECUTED BETWEEN M/S SEPL AND THE ASSESSEE AT PAGES 21 TO 24 OF THE PAPER BOOK AND COPY OF SALE DEED DATED 9.12.2002 PLACED A T PAGES 25 TO 41 OF THE PAPER BOOK. THE COPY OF VALUATION REPORT SU BMITTED TO BANK IS PLACED AT PAGES 42 AND 43 OF THE PAPER BOOK. THE A SSESSEE HAS ALSO FILED COPY OF CIVIL SUIT FILED BY THE ASSESSEE AT P AGES 44 TO 48 OF THE 23 PAPER BOOK AND HAS FURTHER ENCLOSED ASSESSMENT ORDE R PASSED IN THE CASE OF DIFFERENT CONCERNS. 25. NOW COMING TO THE FACTS OF THE PRESENT CASE WE FIND THAT SMT.ERA OHRI ALONGWITH HER DAUGHTERS SOLD 50% SHARE IN THE PROPERTY NO.70, INDUSTRIAL AREA PHASE-1, CHANDIGARH FOR TOTAL CONSI DERATION OF RS.3.20 CRORES. THE AGREEMENT TO SELL WAS EXECUTED BETWEE N SMT.ERA OHRI & HER DAUGHTERS ON THE ONE SIDE AND COMPANY M/S SHARV ILLA ESTATES PVT. LTD. ON THE OTHER SIDE. SUM OF RS.30 LACS WAS PAID VIDE CHEQUES GIVEN ON 18.6.2001. THEREAFTER M/S SEPL CLAIMED TO HAVE ENTERED INTO AN AGREEMENT TO SELL DATED 21.12.2001 WITH SHRI NARIND ER MOHAN MITTAL HUF, SHRI SURINDER MOHAN MITTAL HUF AND SHRI JATIND ER MOHAN MITTAL HUF IN WHICH IT WAS AGREED THAT 27% SHARE IN THE SA ID PROPERTY WOULD BE SOLD FOR RS.50 LACS, COPY OF THE AGREEMENT IS PL ACED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 21 AND 22. THE PARTIES ADMITTED THAT SUM OF RS.35 LACS WAS PAID AS EARNEST MONEY BY WAY OF D IFFERENT CHEQUES OF DATED 22.12.2001 AND 5.1.2002. SUM OF RS.14 LAC S WAS PAID VIDE THREE DIFFERENT CHEQUES DATED 22.12.2001 AND SUM OF RS.14 LACS WAS PAID BY THREE DIFFERENT CHEQUES DATED 5.1.2002. TH EREAFTER THE SALE DEED WAS EXECUTED BY SMT.ERA OHRI ALONGWITH HER DAU GHTERS THROUGH THEIR GPA SMT.ALKA MITTAL, W/O SHRI MUKESH MITTAL I N FAVOUR OF THREE PURCHASERS I.E. S/SHRI NARINDER MOHAN MITTAL HUF, S URINDER MOHAN MITTAL HUF AND JATINDER MOHAN MITTAL HUF. THE BALA NCE CONSIDERATION OF RS.15 LACS WERE ALREADY PAID VIDE THREE DIFFERENT CHEQUES DATED 25.1.2002 AND AS PER THE AGREEMENT BE TWEEN THE PARTIES THE SYMBOLIC TRANSFER WAS GIVEN VIDE SALE DEED DATE D 9.12.2002. IT IS ALSO MENTIONED THAT THE VENDOR HAD OBTAINED NOC FRO M THE ESTATE OFFICER VIDE LETTER DATED 26.11.2002 WHICH WAS VALI D UP TO 31.12.2002. COPY OF THE SALE DEED IS PLACED AT PAGES 25 TO 41 O F THE PAPER BOOK. 24 26. SMT.ERA OHRI AND HER DAPUGHTERS SOLD THE BALANC E SHARE OF 23% TO SHRI VIVEK MOHAN MITTAL AND HIS FAMILY MEMBERS V IDE SEPARATE SALE DEED AND THE TOTAL SALE CONSIDERATION WHICH WAS PAS SED BETWEEN THE PARTIES WAS RS.80 LACS. 27. ON THE OTHER HAND, THE OTHER CO-OWNER SHRI R.K. OHRI IN ORDER TO SALE HIS SHARE IN THE PROPERTY ENTERED INTO AN AGRE EMENT WITH M/S SEPL ON 1.4.2003 FOR TOTAL CONSIDERATION OF RS.1.45 CROR ES. THEREAFTER ON 2.4.2003 SALE DEED IN RESPECT OF THE SAID 23% SHARE IN THE PROPERTY WAS EXECUTED BY SHRI R.K.OHRI THROUGH GPA SHRI ASHW ANI KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPTA IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH ITS DIRECTOR SHRI AJAY KUMA R GUPTA S/O LATE SHRI VISHNU KUMAR GUPTA, BOTH RESIDENTS OF 3307, SE CTOR 19D, CHANDIGARH. THE TOTAL SALE CONSIDIERATION WAS FIXE D AT RS.70 LACS OUT OF WHICH SUM OF RS.5 LACS WAS PAID THROUGH CHEQUES DATED 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003, RS.75 LACS THROUGH CHEQUE DATED 2.4.2003. THE PHYSICAL AND VACANT POSSESSIO N OF THE SAID PORTION OF THE PLOT WAS HANDED OVER TO THE VENDEE. IN THE SAID SALE DEED ALSO IT WAS ACKNOWLEDGED THAT THE VENDOR HAD O BTAINED NOC FROM ESTATE OFFICER, CHANDIGARH WHICH IS VALID UP TO 15. 5.2003. THE TERMS OF THE SALE DEED CLEARLY REFLECTED THAT THE PAYMENT S AGAINST THE SALE CONSIDERATION WERE MADE BY THE ASSESSEE PRIOR TO EX ECUTING ANY AGREEMENT WITH ANY PERSON. SUM OF RS.55 LACS WAS P AID IN ADVANCE AND ONLY SUM OF RS.15 LACS WAS PAID VIDE CHEQUE DAT ED 2.4.2003. IN THE SAID TRANSACTION THE GPA WAS EXECUTED BY SHRI R .K.OHRI ON 1.4.2003 IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA AND THE SALE DEED WAS ALSO EXECUTED BY THE SAID PERSON IN FAVOUR OF THE COMPANY IN WHICH THEY WERE THE DIRECT ORS. THE BALANCE 27% SHARE IN THE SAID PROPERTY WAS SOLD BY SHRI R.K .OHRI THROUGH M/S SEPL TO SHRI RAJESH GUPTA AND HIS FAMILY MEMBERS. THE AGREEMENT TO 25 SELL BETWEEN SHRI R.K.OHRI AND SHRI RAJESH GUPTA & OTHERS WAS EXECUTED ON 1.4.2003 ON WHICH DATE GPA WAS ALSO ISS UED IN FAVOUR OF THE FAMILY MEMBERS OF SHRI RAJESH GUPTA. THE SALE DEED WAS EXECUTED ON 2.4.2003 BY THE SAID FAMILY MEMBERS IN FAVOUR OF SHRI RAJESH GUPTA & OTHERS. 28. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN R ELATION TO THE SAID PURCHASE OF 27% SHARE BY THE ASSESSEES BEFORE US FO R TOTAL CONSIDERATION OF RS.50 LACS THROUGH THE COMPANY NAM ED AS M/S SEPL, AS AGAINST THE PURCHASE MADE BY THE SAID M/S SEPL F ROM SMT.ERA OHRI AND HER DAUGHTERS OF 50% SHARE AT TOTAL SALE CONSID ERATION OF RS.3.20 CRORES. SEARCH AND SEIZURE OPERATION WAS CARRIED O UT AT THE PREMISES OF THE ASSESSEE ALONGWITH SEARCH AT THE PREMISES OF SHRI MUKESH MITTAL, WHO WAS THE ADVOCATE LOOKING AFTER CIVIL DI SPUTES OF THE PARTIES AND WAS THE INTERMEDIARY IN THE SAID DEAL THROUGH F AMILY CONCERN M/S SEPL AND HIS WIFE SMT.ALKA MITTAL WERE ALSO SEARCHE D ON 3.9.2004. THE OTHER PURCHASERS OF THE RESPECTIVE SHARES OF TH E PROPERTY WERE ALSO SEARCHED BY THE INVESTIGATION TEAM ON 3.9.2004 AND VARIOUS DOCUMENTS WERE FOUND AND SEIZED. THE SAID DOCUMENTS REFLECTE D THAT THE PURCHASERS THROUGH THE COMPANY NAMED AS M/S SEPL BY WAY OF CIRCUITOUS TRANSACTION HAD PURCHASED THE RESPECTIVE SHARES IN THE PROPERTY FROM THE SELLERS SMT.ERA OHRI & HER DAUGHT ERS AND SHRI R.K.OHRI, WHO WERE THE JOINT OWNERS OF THE SAID PRO PERTY. THE HAND WRITTEN DOCUMENTS WERE FOUND FROM THE POSSESSION OF SHRI R.K.OHRI IN WHICH THE SALE REFLECTED WAS AT VARIANCE WITH THE D ECLARED SALE CONSIDERATION. ANOTHER ASPECTS WHICH CAME TO LIGHT BY WAY OF THE SAID DOCUMENTS FOUND AND SEIZED FROM THE POSSESSION OF V ARIOUS PERSONS THAT THE PROPERTY WAS INITIALLY PURCHASED AT A HIGH ER CONSIDERATION BUT THEN IT WAS SOLD AT MUCH LESSER CONSIDERATION BY TH E INTERMEDIARY WITHIN A SHORT SPAN OF DAYS WHICH GAVE RISE TO THE SUSPICION THAT SOME 26 ON MONEY HAD EXCHANGED HANDS BETWEEN THE ULTIMATE P URCHASER AND SO CALLED INTERMEDIARY. 29. WE FIND THAT SIMILAR ISSUE OF PURCHASE OF 23% S HARE BY FINAL BUYERS OUT OF SHARE HELD BY SHRI R.K.OHRI THROUGH M /S SEPL AROSE BEFORE THE TRIBUNAL IN ITA NOS.660 TO 663/CHD/2008 IN ACIT VS. SH.AJAY KUMAR GUPTA, ACIT VS. SH.VIJAY KUMAR GUPTA, ACIT VS. SH.ASHWANI KUMAR GUPTA AND ACIT VS. M/S VALCO INDUS TRIES LTD. RESPECTIVELY, WHEREIN THE TRIBUNAL VIDE ORDER DATED 30.4.2014 HAD ELABORATELY TAKEN NOTE OF THE TRANSACTIONS EXECUTED BETWEEN THE PARTIES STARTING FROM THE SELLER TO THE INTERMEDIARY AND GP A/SPA ISSUED BY THE SELLER TO THE ULTIMATE PURCHASER/S AND SALE DEE D BEING EXECUTED BY THE INTERMEDIARY AFTER A GAP OF FEW DAYS AND THE PA YMENTS BEING MADE BY THE ULTIMATE PURCHASER/S MUCH IN ADVANCE TO THE EXECUTION OF ANY DOCUMENTS EVIDENCING TRANSACTION IN ITS FAVOUR AND ALSO THE FACTUM THAT THE SAID PAYMENTS WERE MADE ON DATE/S ON WHICH ADVANCES WERE MADE BY THE INTERMEDIARY TO THE SELLER OF THE PROPE RTY. THE TRIBUNAL AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES IN EN TIRETY CAME TO THE VIEW THAT THE PARTIES HAD INDULGED IN CIRCUITOUS TR ANSACTION AND USED THE COMPANY M/S SEPL AS A INTERMEDIARY TO PUT A SCR EEN ON THE REAL PICTURE. THE COMPANY M/S SEPL WHICH WAS USED AS A INTERMEDIARY, CONSISTED OF DIRECTORS WHO HAD MEAGER SOURCES OF IN COME AND ONE OF THE DIRECTORS IN THE SAID COMPANY WAS THE WIFE OF T HE ADVOCATE WHO WAS LOOKING AFTER THE CIVIL DISPUTES OF THE PARTIES . BUT THE PAYMENTS WERE MADE BY ULTIMATE PURCHASER IN THE ACCOUNT OF M /S SEPL WHO AT THE SIMILAR TIME ISSUED CHEQUES TO THE SELLER OF TH E PROPERTY. THE TRIBUNAL PLACED RELIANCE ON THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN IT WAS HELD THAT IT IS TRUE THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT APPARE NT IS NOT REAL BUT 27 THEN THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT O N BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT , SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE T HE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES . 30. THE TRIBUNAL IN VIEW OF THE PROPOSITION LAID DO WN BY THE HON'BLE APEX COURT IN CIT V. DURGA PRASAD MORE (SUPRA) HELD THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAD TO BE SEEN IN THE PERSPECTIVE OF THE TOTAL EVENTS AND CAME TO THE FIN DING THAT THOUGH THE AGREEMENT TO SELL WAS EXECUTED BETWEEN THE SELLER A ND M/S SEPL ON 1.4.2003 EVIDENCING PAYMENT AGAINST THE SALE CONSID ERATION PRIOR TO 1.4.2003 AND THE SALE DEED BETWEEN M/S SEPL AND THE ULTIMATE PURCHASER DATED 2.4.2003 ALSO EVIDENCING CERTAIN PA YMENTS BEING MADE PRIOR TO THE DATE OF EXECUTION OF SALE DEED. FURTH ER GPA AND SPA/S WERE EXECUTED BY THE SELLER TO THE FAMILY MEMBERS O F THE ULTIMATE PURCHASER AND THE TRIBUNAL QUESTIONED THE CONTENTIO N OF THE ASSESSEE THAT THE ULTIMATE PURCHASER HAD COME INTO THE PICTU RE ONLY ON 1/2.4.2003 THEN HOW CAN PAYMENTS AGAINST THE SALE C ONSIDERATION WERE MADE IN DECEMBER, 2002. THE TRIBUNAL THUS HELD TH AT THIS CLEARLY SHOWS THAT M/S SEPL WAS JUST USED AS INTERMEDIARY T O CAMOUFLAGE THE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BE TWEEN THE SELLER AND ULTIMATE PURCHASE . IT WAS FURTHER HELD THAT ON MONEY HAD BEEN PAID BY THE ULTIMATE PURCHASER IN ORDER TO MEET THE SALE CONSIDERATION PAID TO THE SELLER OF THE PROPERTY . THE TRIBUNAL THUS CONCLUDED IN THE FACTS OF THAT THE CASE, THE PROPERTY WAS PURCHASED FOR A SUM OF RS.1.45 CRORES I.E. THE SALE PRICE CLAIMED TO BE PAID TO TH E SELLER BY M/S SEPL AS AGAINST ONE OF THE ULTIMATE PURCHASER WHO HAVE B OUGHT FOR RS.70 LACS BY WAY OF CIRCUITOUS TRANSACTION. THE TRIBUN AL IN THE SAID FACTS 28 AND CIRCUMSTANCES FOUND IT TO BE A FIT CASE TO RAIS E CORPORATE VEIL IN ORDER TO DETERMINE THE NATURE OF TRANSACTIONS. IT WAS HELD BY THE TRIBUNAL THAT THE COMPANY M/S SEPL HAS BEEN USED AS INTERMEDIARY THROUGH DIRECTOR/S WHO HAD MEAGER SOURCES OF INCOME . IT WAS FURTHER NOTED THAT THOUGH NO ADDITION HAS BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR IN ONE OF ITS DIRECTOR SMT.ALKA MITTAL, THE TRIBUNAL HELD BUT THAT ITSELF WOULD NOT SUPPORT THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . FURTHER THE TRIBUNAL FOUND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'B LE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILL S LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVE NT TAX OBLIGATION, HELD AS UNDER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DE SCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE V EIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTION. IT IS TRUE THAT FROM THE JURISTIC POINT OF VIEW THE CO MPANY IS A LEGAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED T O DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS M EMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOM IC REALITIES BEHIND THE LEGAL FAADE. FOR EXAMPLE, THE COURT HA S POWER TO DISREGARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATION. 31. THE TRIBUNAL VIDE PARA 72 HELD AS UNDER: 72. IN THE FACTS OF THE PRESENT CASE, WE HAVE FOUN D THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN OR DER TO COMPLETE THE TRANSACTION OF PURCHASE OF 23% SHARE I N THE PROPERTY FROM SHRI R.K.OHRI TO ITSELF. 32. THE TRIBUNAL THUS HELD THAT ON MONEY WAS TAXABL E IN THE HANDS OF ULTIMATE PURCHASER AS INCOME FROM UNDISCLOSED SO URCES. THE FACTUAL ASPECTS WERE CONSIDERED BY THE TRIBUNAL AND IT WAS HELD AS UNDER: 29 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE ADJUDICATING THE ISSUE RAISED IN T HE PRESENT BUNCH OF APPEALS, WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE. THE CAPTIONED APPEALS IS IN RELATION TO THE PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. THE SAID PRO PERTY WAS JOINTLY OWNED BY SHRI R.K.OHRI S/O LATE SHRI DWARKA NATH AND SMT.ERA OHRI DAUGHTER-IN-LAW OF SHRI DWARKA NATH AN D HER TWO DAUGHTERS. THERE WERE CERTAIN LITIGATIONS BETWEEN THE TWO PARTIES ON ACCOUNT OF PROPERTY DISPUTE VIS--VIS PR OPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH AND HOUSE NO.3 42, SECTOR 9-D, CHANDIGARH. THE CASES REGARDING SETTLEMENT OF ESTATE OF LATE SHRI DWARKA NATH WERE PENDING IN CIVIL COURT A ND BEFORE THE DECISION OF THE CIVIL SUIT, ONE ADVOCATE SHRI M UKESH MITTAL, WHO WAS HANDLING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND ASKED IN OCTOBER, 2002 WHETHER HE WAS INTERESTED IN OUT OF COURT SETTLEMENT. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT I N ANOTHER PROPERTY I.E. HOUSE NO.342, SECTOR 9-D, CHANDIGARH FOR CERTAIN CONSIDERATION. IN ORDER TO TAKE COMPLETE OWNERSHIP OF HOUSE NO.342, SECTOR 9, CHANDIGARH, HE INFORMED SHRI MUKE SH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70, INDUST RIAL AREA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE. SH RI MUKESH MITTAL THROUGH ENTITY NAMED M/S SHARVILA ESTATES PV T. LTD. ENTERED INTO AN AGREEMENT WITH SHRI R.K,OHRI FOR SA LE OF HIS SHARE IN PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHAN DIGARH FOR TOTAL CONSIDERATION OF RS.2.25 CRORES. 47. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALON GWITH THE SHARE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDU STRIAL AREA, CHANDIGARH FOR TOTAL CONSIDERATION OF RS.3.20 CRORE S. ON 18.6.2001 ADVANCE PAYMENT OF RS.30 LACS WAS GIVEN T O THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXECUTED BETWEE N SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL, DIRECTOR OF M/S SEPL, ON THE OT HER SIDE. THE SAID PROPERTY THEREAFTER WAS FINALLY SOLD TO FO UR GROUPS OF PERSONS NAMELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU ASSOCIATES LTD.), 184, INDL. AREA, PHASE-I, CHANDIG ARH (RESIDENCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA, AJAY KR. GUPTA AND VIJAY KR. GUPTA IS H.NO.3007, SECTOR 19-D, CHANDIGARH) (23% SHARE OF PLOT WHOSE T OTAL SIZE IS AROUND 20000 SQ.YDS.) 2. SH. RAJESH GUPTA, SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA, SMT. VEENU GUPTA W/O SH. YOGESH GUPTA, ALL RESIDENTS OF H.NO.1216, SECTOR 19-B, CHANDIGARH (27% SHARE OF PLOT). 3. SH. NARINDER MOHAN MITTAL HUF, SH. SURINDER MOHAN MITTAL HUF, SHRI JATINDER MOHAN MITTAL HUF THROUGH ABOVE T HREE KARTAS WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.3 89, SECTOR 30, CHANDIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL, SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL, SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL, RESIDEN T OF H.NO. 123, SECTOR 21-A, CHANDIGARH AND H.NO.3158, SECTOR 21-D, CHANDIGARH (23% SHARE OF PLOT). 30 48. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA, SPA AND WILL FROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHRI, HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF M/S SEPL DATED 18.6.2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES, AGAINST WHICH EARNEST MONEY OF RS.30 LACS W AS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGN ED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2.90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WH ICH EARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS R EGISTERED IN THE NAME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKESH M ITTAL AND SHRI VIVEK MOHAN MITTAL, COUSIN OF SHRI MUKESH MITT AL BOTH SHOWN AS RESIDENTS OF 1526, SECTOR 18-D, CHANDIGARH . THE WILL WAS REGISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHERS PURCHASED 23% SHARE OF THE SAID PRO PERTY FOR RS.80 LACS AND SHRI NARINDER MOHAN MITTAL, HUF & OT HERS PURCHASED 27% SHARE OF THE SAID PROPERTY FOR ANOTHE R RS.50 LACS. THE SHARE OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI S URINDER MITTAL, JITENDER MOHAN MITTAL HUF AND NARINDER MOHA N MITTAL HUF IN JOINT FROM SHRI MUKESH MITTAL FOR RS.50 LACS . THE BALANCE 23% SHARE IN THE SAID PROPERTY BELONGING TO THE SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED FOR RS .80 LACS VIDE SEPARATE SALE DEED. 49. THE 50% SHARE OF THE SAID PLOT OWNED BY SHRI R. K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHARE IN THE SAID PROPERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI, WHO IN TURN CLAIMED TO HAVE SOLD TO M/S VISHNU ASSO CIATES LTD.(NOW VALCO INDUSTRIES LTD.). S/SHRI ASHWANI KUM AR GUPTA, AJAY KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE AGREEM ENT TO SELL BETWEEN SHRI R.K,.OHRI AND SHRI ANIL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY EXECUTED ON 1.4.20 03. THE ORIGINAL AGREEMENT TO SELL WAS SEIZED FROM THE RESI DENCE SHRI R.K.OHRI AND WAS MARKED AS PAGES 73 TO 76 OF ANNEXU RE-A/342, SECTOR 9, CHANDIGARH. AS PER THE SAID AGREEMENT T OTAL SALE PRICE PAID TO SHRI R.K,OHRI WAS RS.1.45 CRORES. ON THE DATE OF EXECUTION OF SALE I.E. 1.4.2003 GPA WAS GIVEN BY SH RI R.K.OHRI TO SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA A ND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. TH E SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTERED ON 1.4.2003. IN RESPECT OF THE SAID 23 % SHARE OF THE SAID PROPERTY, SALE DEED WAS REGISTERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROUGH SHRI AJAY KUMAR GUPTA, DIRE CTOR AND SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED THE SALE CONSIDER ATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAID BY WAY OF THREE DIFFERENT CHEDQUES I.E. RS.5 LACS VIDE CHEQUE DATED 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LA CS VIDE VHEQUE DATED 2.4.2003. 50. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS, NAMELY S/SHRI RAJESH GUPT A, YOGESH GUPTA, SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND S MT.VEENA GUPTA W/O SHRI YOGESH GUPTA, ALL RESIDENTS OF HOUSE NO.12, 31 SECTOR 19B, CHANDIGARH. THE AGREEMENT TO SELL WAS SIGNED BETWEEN SHRI R,K.OHRI AND ALL THE FOUR PURCHASERS O N 1.4.2003 FOR SALE CONSIDERATION OF RS.90 LACS. THE ASSESSE E PAID RS.1 LAC BY DIFFERENT FOUR CHEQUES EACH DATED 23.12.2002 AND THEN PAID RS.21.50 LACS BY FOUR DIFFERENT CHEQUES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANUP GUPTA S /O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SH RI R.K.OHRI TO ALL THE FOUR PERSONS ON 1.4.2003 AND THE SALE DE ED WAS REGISTERED ON 2.4.2003 BETWEEN SHRI R.K.OHRI THROUG H SHRI ANUP GUPTA, GPA I.E. SON OF ONE OF THE PURCHASER AND ALL THE FOUR PURCHASERS. 51. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIO NS WERE GROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDING S UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SHRI R. K.OHRI, VIVEK MOHAN MITTAL GROUP, VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWITH SEARCH AGAINST SHRI MUKESH MI TTAL AND OTHERS. DURING THE SEARCH OPERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND AND AS PER THE SAID PAPER TOTAL SALE CONSIDERATION FOR SALE OF PLOT NO.70, INDUSTRIAL AR EA, PHASE-1, CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3,24,5 6,000/- WHICH WAS SPLITTED IN CASH/DD OF RS.2.25 CRORES AND CASH OF RS.99.56 LACS. THIS PAPER FURTHER CONTAINED THE DE TAILS OF PAYMENT TO SMT.ERA OHRI AND OTHERS FOR PURCHASE OF HOUSE NO.342, SECTOR 9, CHANDIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS.80 LACS WERE TO BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WAS RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT THE SAID PAPER W AS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGARDING CHE QUE/DD AS CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH INVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE PO SSESSION OF SHRI R.K.OHRI SHOWED THAT 50% SHARE OF SHRI R.K.OHR I WAS AGREED TO BE PURCHASED BY M/S SEPL FOR RS.3.24 CROR ES. ON THE OTHER HAND, SMT.ERA OHRI AND HER DAUGHTERS SOLD 50 % SHARE IN THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.3.2 0 CRORES BY CHEQUE. AS AGAINST THE PURCHASE CONSIDERATION OF RS.6,44,56,000/- THE SHARE OF SALE CONSIDERATION PA ID TO SMT.ERA OHRI WAS RS.3.20 CRORES AND TO SHRI R.K.OHRI WAS RS.3,24,56,000/-, BY M/S SEPL. THE DECLARED SALE C ONSIDERATION BY DIFFERENT PARTIES AGAINST THE PURCHASE OF RESPEC TIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CRORES ONLY, T HE BREAK UP OF WHICH WAS AS UNDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL, ARVIND MITTAL, SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VA SUNDRA MITTAL W/O ARVIND MITTAL R/O 123, SEC-21A, CHANDIGA RH FOR DECLARED CONSIDERATION OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL, SURINDER MOHA N MITTAL, JATINDER MOHAN MITTAL R/O 389, SEC-30, CHANDIGARH FOR DECLAR ED CONSIDERATION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007, SEC-19D, CHANDIGARH FOR DECLARED C ONSIDERATION OF RS. 70 LACS. 32 II) 27% PURCHASED BY SH. RAJESH GUPTA, YOGESH GUPTA , NEELAM GUPTA W/O RAJESH GUPTA, VEENU GUPTA W/O YOGESH GUPTA R/O 1216 , SEC-19B, FOR DECLARED CONSIDERATION OF RS. 90 LACS. 52. THE CASE OF THE REVENUE WAS THAT THE PURCHASE CONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORE S. HOWEVER, THE ADMITTED CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I .E. RS.3.20 CRORES BY SMT.ERA OHRI AND RS.2.25 CRORES BY SHRI R .K.OHRI AS AGAINST THE DECLARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CRORES TO ULTIMATE BUYERS. 53. THE FIRST ASPECT OF THE ISSUE RAISED BEFORE US IS IN RELATION TO THE ADDITIONAL EVIDENCE FILED BY THE RE VENUE VIDE APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLA TE RULES. THE SO CALLED ADDITIONAL EVIDENCE FILED BY THE REVE NUE CONSISTS OF TERMS OF PAYMENT FOR RP120 AND IND70 IN THE HAND WR ITING SHRI R.K.OHRI WHICH FOUND FROM HIS POSSESSION AT HIS RES IDENCE. THE OBJECTION OF THE LEARNED A.R. FOR THE ASSESSEE AGAI NST THE ADMISSION OF THE SAID ADMISSION THAT IT IS NOT FOUN D FROM HIS POSSESSION BUT THE SAID DOCUMENT WAS CONFRONTED TO SHRI ASHWANI KUMAR GUPTA DURING THE COURSE OF RECORDING OF HIS S TATEMENT AND THE SAME ONCE BEING CONFRONTED TO THE RESPECTIV E PARTIES CANNOT BE CALLED AN ADDITIONAL EVIDENCE AND MERITS TO BE ADMITTED. THE DOCUMENT AT SR.NO.2 GPA EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF M/S SEPL HAD ALSO BEEN REFERR ED TO BY THE ASSESSING OFFICER UNDER PARA 8.2 OF THE ASSESSMENT ORDER AS SIMILAR GPA HAD BEEN EXECUTED IN FAVOUR OF SHRI ASH WANI KUMAR GUPTA ALSO AND HENCE THE SAME IS NOT IN THE FORM OF ADDITIONAL EVIDENCE THOUGH SO CALLED. THE NEXT DOCUMENT IS SP A ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI AJAY GUPTA WHO IS O NE OF THE DIRECTOR OF M/S VALCO INDUSTRIES LTD. AND THE SAID DOCUMENT EVEN IF IT IS ADDITIONAL EVIDENCE NEEDS TO BE ADMITTED A S IT RELATES TO THE TRANSACTION. SIMILAR GPA HAD BEEN ISSUED IN F AVOUR OF SHRI RAJESH GUPTA AND SHRI YOGESH GUPTA BY SHRI R.K.OHRI ON 1.4.2003 WHICH IS NOT RELEVANT TO THE PRESENT ASSES SEE BUT IS RELEVANT TO OTHER GROUP CASES. THE NEXT DOCUMENTS I.E. REPLY TO NOTICE UNDER SECTION 142(1) OF THE ACT DATED 20.11. 2006 BY SHRI R.K.OHRI IS THE DOCUMENT PROCURED BY THE DEPARTMENT ON A LATER DATE FROM THE ASSESSING OFFICER OF SHRI R.K.OHRI IN WHICH HE ADMITS THAT HE HAD SOLD 50% SHARE IN HIS PROPERTY. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THIS WAS ONLY A REFERENCE MATERIAL. THE DOCUMENT AT SR.NO.6, IS NOT PRESSED FOR ADMISSION AND HENCE THE SAME IS DISMISSED. THE DOCUMENTS AT SR.NOS. 7 AND 8 ARE PART OF APPRAISAL REPORT AND AS PER THE LEARN ED D.R. FOR THE REVENUE THESE ARE PART OF THE ARGUMENTS OF THE DEPA RTMENT. HOWEVER, WE FIND NO MERIT IN THE SAID DOCUMENT AND THE SAID DOCUMENTS AT SR.NOS.7 AND 8 ARE NOT ADMITTED AS ADD ITIONAL EVIDENCE. THE DOCUMENT AT SR.NO.9 IS ADMITTEDLY N OTICE ISSUED BY THE DEPARTMENT UNDER SECTION 142(1) OF THE ACT I N THE CASE OF SHRI ASHWANI KUMAR GUPTA WHICH IS PART OF RECORD AN D IS TO BE CONSIDERED FOR ADJUDICATING THE ISSUE. THE LAST DO CUMENT AT SR.NO.10 IS SALE DEED OF HOUSE NO.164, SECTOR 27, C HANDIGARH WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE CASE OF SHRI AJAY GUPTA UNDER PARA 10 AT PAGE 8 OF THE ASSE SSMENT ORDER AND THE SAME IS TAKEN ON RECORD. THE LEARNED A.R. FOR THE ASSESSEE IN ANY CASE HAS STATED THAT BOTH THE DOCUM ENTS AT SR.NO.9 AND 10 WERE MATTER OF FACT AND WERE TO BE C ONSIDERED. 33 THE LEARNED A.R. FOR THE ASSESSEE HAD ALSO OBJECTED TO ADMISSION OF THE WRITTEN NOTE ACCOMPANYING THE ADDITIONAL EVI DENCE BEING NOT SIGNED BY PROPER PERSON, HAS NOT MERIT AS THE S AME AT BEST CAN BE TAKEN WRITTEN ARGUMENTS AND THE SAME ARE ADM ITTED. 54. THE REVENUE HAS ALSO FILED ON RECORD THE STATEM ENT OF SHRI R.K.OHRI RECORDED DURING THE COURSE OF SEARCH AT HIS RESIDENCE ON 3.9.2004. FURTHER STATEMENT OF SHRI A NIL DUBEY RECORDED ON OATH UNDER SECTION 131 OF THE ACT ON 18 .10.2004 HAS ALSO BEEN FILED ON RECORD BY THE LEARNED D.R. FOR T HE REVENUE. PAPER BOOK HAD ALSO BEEN FILED BY THE REVENUE WHICH CONSISTED OF SPA IN RESPECT OF SHRI ANIL DUBEY DATED 1.4.2003 , GPA OF SHRI R.K.OHRI IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY GUPTA DATED 1.4.2003 AND AN AGREEMENT TO SALE BY SH RI R.K.OHRI WITH M/S SEPL DATED 1.4.2003. FURTHER SALE DEED OF 23% SHARE WITH M/S VISHNU ASSOCIATES LTD. HAD BEEN FILED ALON GWITH SALE DEED OF HOUSE NO.164, SECTOR 27, CHANDIGARH. THE A SSESSEE HAS FILED VOLUMINOUS PAPER BOOK BUT AS POINTED OUT BY U S IN THE PARAS HEREINABOVE ONLY PAGE 459 HAS BEEN REFERRED T O BY THE ASSESSEE AND NO OTHER PAGE HAS BEEN REFERRED TO BY THE LEARNED A.R. FOR THE ASSESSEE. 55. SHRI R.K.OHRI IN ORDER TO SELL HIS SHARE IN THE PROPERTY HAD ENTERED INTO AN AGREEMENT WITH M/S SHARVILLA ES TATES LTD. ON 1.4.2003 WHICH IS AT PAGES 8 TO 11 OF THE PAPER BOO K FILED BY THE REVENUE. THE LEARNED A.R. FOR THE ASSESSEE, ON THE OTHER HAND, HAD FILED AN AGREEMENT TO SELL EXECUTED ON 23.12.20 02 BY SHRI R.K.OHRI WITH M/S SEPL WHICH IS MARKED AS ANNEXURE- A IN WHICH THE TOTAL CONSIDERATION IS MENTIONED AT RS.1.45 CRO RES. WE MAKE A REFERENCE TO VARIOUS COVENANTS IN THE TWO DIFFERE NT AGREEMENTS TO SELL IN ORDER TO UNDERSTAND THE TERMS AGREED UPO N BETWEEN THE PARTIES AND ALSO TO UNDERSTAND WHICH OF THE AGREEME NTS IS ACTUALLY EXECUTED BETWEEN THE PARTIES. ADMITTEDLY THE AGREEMENT TO SELL FILED BY THE ASSESSEE WHICH IS MARKED AS AN NEXURE-A WAS FILED BEFORE THE CIT (APPEALS) AND EVEN BEFORE US D URING THE COURSE OF HEARING SEPARATELY AND NOT AS PART OF VOL UMINOUS PAPER BOOK. THE SAID AGREEMENT TO SELL IS EXECUTED BETWE EN SHRI R.K.OHRI AND M/S SEPL FOR CONSIDERATION OF RS.1.45 CRORES. ONLY A PHOTOCOPY OF THE SAID AGREEMENT HAS BEEN FIL ED AND THE ORIGINAL AGREEMENT TO SELL HAS NOT BEEN PRODUCED BY THE ASSESSEE. EVEN THE BACK SIDE OF THE STAMP PAPERS HAS NOT BEE N PHOTOCOPIED AND FILED BEFORE US. THE SAID AGREEMENT MARKED AS ANNEXURE-A WAS FILED BEFORE THE CIT (APPEALS) WHO HAS ADJUDICA TED THE ISSUE AFTER MAKING REFERENCE TO THE SAME, BUT WITHOUT CAL LING FOR ANY REMAND REPORT IN RESPECT OF THE SAID ADDITIONAL EVI DENCE. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT SHRI R.K. OHRI HAD ISSUED RESPECTIVE SPAS AND GPAS IN FAVOUR OF DIFFER ENT PERSONS ON 1.4.2003 AND NO SUCH SPA AND GPA WAS ISSUED ON 2 3.12.2002 I.E. AS PER THE AGREEMENT TO SELL MARKED AS ANNEXUR E-A. 56. THE CONCISE TERMS OF AGREEMENT BETWEEN SHRI R.K .OHRI AND M/S SEPL VIDE AGREEMENT TO SELL DATED 1.4.2003 PLACED AT PAGES 8 TO 11 OF THE PAPER BOOK FILED BY THE REVENU E WERE AS UNDER : A) SHRI R.K.OHRI AGREED TO SELL 23% PORTION OF TOTA L OF 50% SHARE IN THE SAID PROPERTY ALONGWITH EXISTING BUILD ING CONSTRUCTED THEREUPON. 34 B) THE FRONT PORTION OF THE SAID PLOT ALONGWITH BUI LDING WAS IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AN D THE REMAINING PORTION OF THE PLOT AS WELL AS THE EXISTI NG BUILDING ERECTED THEREOF WERE LYING VACANT AND SALE WAS OF BACK PORTION. C) THE SELLER ADMITTED THAT THERE WAS DISPUTE WITH HIS BROTHERS AND SISTERS PENDING IN THE CIVIL COURTS AN D SOME AMOUNT HAD TO BE PAID TO THEM. D) THE SELLER FURTHER ACKNOWLEDGED THAT HE HAD AGRE ED TO SELL 23% SHARE IN THE PORTION OF PLOT I.E. PORTION BEHIND THE TENANTED PORTION WITH PASSAGE FOR ENTRY FROM TH E MAIN GATE VIDE AGREEMENT TO SELL DATED 23.12.2002. E) IN THE SALE DEED THE ASSESSEE ACKNOWLEDGED RECEI PT OF RS.1.45 CRORES AS THE SALE PRICE OF HIS 23% SHARE I N THE PLOT AND THE MODE OF PAYMENT WAS AS UNDER: F) THE SELLER ACKNOWLEDGED THAT AFTER RECEIVING SAL E CONSIDERATION HE HAD EXECUTED GPA AND SPA AND HAD ALSO HANDED OVER PHYSICAL AND VACANT POSSESSION OF THE AREA OF THE PLOT TO THE PURCHASER OF THE PLOT. G) THE PURCHASER WAS AT LIBERTY TO GET THE SALE EFF ECTED IN ITS OWN NAME OR IN THE NAME OF THE NOMINEE. H) THE ORIGINAL SALE DEEDS WERE HANDED OVER TO THE PURCHASER. I) THE EXPENSES OF THE STAMP AND REGISTRATION CHARG ES WERE TO BE BORNE BY THE PURCHASER ONLY. J) THERE WAS A CLAUSE AGAINST NON ENCASHMENT OF POS T DATED CHEUQES AND CANCELLATION OF TERMS OF AGREEMENT. 57. AFTER THE EXECUTION OF AGREEMENT TO SELL DATED 1.4.2003, ON 2.4.2003 THE SALE DEED IN RESPECT OF 23% SHARE I N THE SAID PROPERTY WAS EXECUTED BY SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPT A IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH ITS DI RECTOR SHRI AJAY KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPPTA, BOTH AT HOUSE NO.3307, SECTOR 19D, CHANDIGARH. THE TOTAL S ALE CONSIDERATION OF 23% SHARE IN THE SAID PLOT WAS FIX ED AT RS.70 LACS, OUT OF WHICH SUM OF RS.5 LACS WAS PAID THROUG H CHEQUE ON 23.12.2002, RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS THROUGH CHEQUE DATED 2.4.2003. VIDE CLAUSE 2 OF THE SAID AGREEMENT, IT WAS ACKNOWLEDGED THAT THE VENDOR HAD ALREADY HANDED OVER PHYSICAL AND VACANT POSSESSION OF THE P ORTION OF THE SAID PLOT TO THE VENDEE. THE EXPENSES OF SALE DEE D WERE BORNE BY THE VENDEE. BESIDES OTHER TERMS AND CONDITIONS AGREED UPON BETWEEN THE PARTIES, IT WAS ALSO ACKNOWLEDGED THAT THE VENDOR HAD OBTAINED NOC FROM THE ESTATE OFFICER, CHANDIGAR H WHICH WAS VALID UP TO 15.5.2003. THIS DOCUMENT WAS REGIS TERED ON 2.4.2003 AND IS PLACED AT PAGES 12 TO 20 OF THE PAP ER BOOK FILED BY THE DEPARTMENT. THE PERUSAL OF THE SAID SALE DE ED REFLECTS THAT THE PAYMENT FOR PURCHASE OF THE SAID 23% SHARE IN THE PROPERTY WAS MADE BY THE ASSESSEE PRIOR TO EXECUTIN G ANY 35 AGREEMENT WITH ANY PERSON. THE ASSESSEE CLAIMS TO HAVE PAID RS.5 LACS ON 23.12.2002. RS.50 LACS VIDE CHEQUE DA TED 10.2.2003 AND ONLY BALANCE SUM OF RS. 15 LACS WAS PAID THROUG H CHEQUE DATED 2.4.2003. 58. THE REVENUE HAD ALSO PLACED ON RECORD COPY OF G PA ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI ASHWANI K UMAR GUPTA AND SHRI VIJAY KUMAR GUPTA DATED 1.4.2003 WHICH IS PLACED AT PAGES 4 TO 7 OF THE PAPER BOOK FILED BY THE REVENUE IN WHICH POWERS HAD BEEN GIVEN TO EXECUTE SALE DEED IN ADDIT ION TO VARIOUS OTHER POWERS. THE SPA WAS EXECUTED BY SHRI R.K.OHR I IN FAVOUR OF SHRI ANIL DUBEY IN WHICH HE WAS GIVEN CERTAIN LI MITED POWERS IN RESPECT OF THE SAID TRANSACTION. THE COPY OF TH E SAID SPA IS PALCED AT PAGES 1 TO 3 OF THE PAPER BOOK FILED BY T HE REVENUE. SHRI R.K.OHRI ALSO ISSUED GPA IN FAVOUR OF SHRI RAJ ESH KUMAR S/O SHRI KANGAN LAL, DIRECTOR OF SEPL WHICH WAS FIL ED AS AN ADDITIONAL EVIDENCE AND THE SPA IN FAVOUR OF SHRI A JAY KUMAR GUPTA TO DO CERTAIN ACTS WHICH WAS ALSO FILED BY T HE DEPARTMENT AS ADDITIONAL EVIDENCE. ANOTHER GPA WAS ISSUED IN FAVOUR OF SHRI RAJESH GUPTA AND FAMILY MEMBERS WHO HAVE PURCH ASED BALANCE 27% SHARE FROM SHRI R.K.OHRI. THE SAID GPA S ARE DATED 1.4.2003. IN ALL THE DOCUMENTS I.E. GPA AND SPA EX ECUTED BY SHRI R.K.OHRI THE WITNESSES WERE THE SAME I.E. SHRI P.K.DASS, ADVOCATE AND SHRI AJAY SINGH R/O DADU MAJRA COLONY, CHANDIGARH. IN THE AGREEMENT TO SELL DATED 1.4.200 3 THE SECOND WITNESS IS THE SAME I.E. SHRI AJAY SINGH. IN THE SALE DEED EXECUTED ON 2.4.2003 BOTH THE WITNESSES ARE SAME I. E. S/SHRI P.K.DASS, ADVOCATE AND AJAY SINGH. 59. THE ASSESSEE, ON THE OTHER HAND, PLACED RELIANC E ON AN AGREEMENT TO SALE DATED 23.12.2002 WHICH IS PLACED AS AN ANNEXURE-A IN THE APPEAL FOLDER IN WHICH HE POINTS OUT THAT THE VALUE OF THE PLOT AND STRUCTURE WAS FIXED AT RS.70 LACS AND VALUE OF MATERIAL AND MACHINERY WAS FIXED AT RS.75 LACS T OTALING RS.1.45 CRORES. THE SAID AGREEMENT TO SELL FILED B Y THE ASSESSEE HAS NO EVIDENTIARY VALUE AS FIRST THE ORIGINAL OF T HE SAID AGREEMENT HAS NOT BEEN FILED ON RECORD NOR PRODUCED AND THE ASSESSEE HAD NOT EVEN FILED THE SAID AGREEMENT TO S ELL BEFORE THE ASSESSING OFFICER AND EVEN MADE ANY SUBMISSION IN T HIS REGARD BEFORE THE ASSESSING OFFICER. FURTHER THE SO CALLE D AGREEMENT TO SELL WAS NOT FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF SHRI R.K.OHRI. THE ASSESSEE FILED COPY OF THE A GREEMENT TO SELL AS ADDITIONAL EVIDENCE BEFORE THE CIT (APPEALS ), WHO HAS ADMITTED THE SAME AND ADJUDICATED THE ISSUE PLACING EVIDENCE ON THE SAME, BUT WITHOUT FOLLOWING THE PROCEDURE LAID DOWN IN RULE 46A OF THE INCOME TAX RULES. THE PROVISIONS OF RUL E 46A OF IT RULES CLEARLY PROVIDE THAT BEFORE ADMITTING ANY ADD ITIONAL EVIDENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) MUST COME TO A FINDING THAT THE CONDITIONS PRESCRIBED IN RULE 46A HAVE BEEN SATISFIED. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS MANISH BUILDWELL PVT. LTD. IN 245 CTR (P&H) 397 HAD LAID DOWN THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTL Y COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THE HON'BLE HIGH COURT FURTHER HELD THAT WHERE THE COMMISSIONER OF INCOME TAX (APP EALS) WITHOUT BEING PROMPTED BY THE ASSESSEE WHILE DEALIN G WITH THE 36 APPEAL CONSIDERED IT FIT TO CAUSE OR MAKE FURTHER E NQUIRY BY VIRTUE OF POWERS UNDER SECTION 250(4) OF THE ACT, T HEN THE REQUIREMENTS OF RULE 46A NEED NOT TO BE FOLLOWED BU T WHERE THE ASSESSEE INVOKES RULE 46A, THEN IT IS INCUMBENT UPO N THE COMMISSIONER OF INCOME TAX (APPEALS) TO COMPLY WITH THE REQUIREMENTS OF THE RULE STRICTLY. THE AGREEMENT T O SELL MARKED AS ANNEXURE-A FILED BY THE ASSESSEE DOES NOT INSPIR E CONFIDENCE AND CANNOT BE RELIED UPON AS THE ASSESSEE HAD FAILE D TO BRING ON RECORD ANY EVIDENCE TO PROVE ITS VERACITY. 60. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD PURCHASED THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.70 LACS WHICH HAD BEEN DECLARED IN HIS ACCOUNT AND HENCE NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE PURSUANT TO SEARCH PROCEEDINGS CARRIED OUT IN THE CASE OF THE ASSESSEE . THE CASE OF THE REVENUE, ON THE OTHER HAND, IS THAT M/S VISHNU ASSOCIATES LTD. NOW M/S VALCO INDUSTRIES LTD. HAD PURCHASED TH E SAID PORTION OF PLOT FROM SHRI R.K.OHRI BY USING THE NAM E OF M/S SEPL WHO IS INTERMEDIARY. THE SEQUENCE OF EVENTS AND FUND FLOW RELATING TO THE TRANSACTION HAVE TO BE CONSIDERED F OR ADJUDICATING THE ISSUE RAISED IN THE PRESENT SET OF APPEALS. 61. DURING THE COURSE OF SEARCH AND SEIZURE OPERATI ON CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI R.K .OHRI ON 3/4.9.2003 AN AGREEMENT TO SELL EXECUTED BY SHRI R. K.OHRI WITH M/S SEPL DATED 1.4.2003 WAS FOUND. THE COPY OF THE SAID AGREEMENT TO SELL IS PLACED AT PAGES 8 TO 11 OF THE PAPER BOOK. AS REFERRED BY US IN THE PARAS HEREINABOVE THE SAID AGREEMENT WAS EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF M/S SEPL THROUGH HIS DIRECTOR SHRI ANIL DUBEY FOR TOTAL CONSIDERATION OF RS.1.45 CRORES. THE SAID DOCUMENT TALKS OF THE PAYMENT REC EIVED PRIOR TO THE DATE OF EXECUTION OF THE AGREEMENT TO SELL AND CERTAIN PAYMENTS RECEIVED BY WAY OF POST-DATED CHEQUES DATE D 1.5.2003. A SUM OF RS.71 LACS WAS RECEIVED BY SELLELR SHRI R. K.OHRI UP TO 15.2.2003 AND BALANCE SUM OF RS.74 LACS WAS RECEIVE D BY WAY OF POST-DATED CHEQUES. IN THE SAID AGREEMENT THOUGH T HERE IS A REFERENCE TO AN AGREEMENT TO SELL DATED 23.12.2002 BUT THE COPY OF THE SAID AGREEMENT WAS NOT FOUND DURING THE COUR SE OF SEARCH, NOR ANY COPY WAS PRODUCED BEFORE THE ASSESSING OFFI CER. THE RECITALS OF THE AGREEMENT OF SALE DATED 1.4.2003 TA LKS OF FRONT PORTION OF THE SAID PLOT ALONGWITH EXISTING BUILDIN G BEING IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AND R EMAINING PORTION OF THE PLOT ALONGWITH BUILDING ERECTED THER EUPON WAS CLAIMED TO BE LYING VACANT AND WAS IN EXCLUSIVE POS SESSION OF THE SELLER. THE SELLER WAS INTERESTED IN SELLING THE B ACK PORTION AS HE HAD TO SETTLE THE DISPUTE PENDING WITH HIS BROTH ERS AND SISTER IN THE CIVIL COURTS, CHANDIGARH. THE SELLER SHRI R .K.OHRI SPECIFIED IN THE AGREEMENT TO SELL THAT HE AFTER RE CEIVING FULL AND FINAL SALE CONSIDERATION HAD EXECUTED GPA AND SPA W HICH WERE IRREVOCABLE AND HAD ALSO HANDED OVER THE PHYSICAL A ND VACANT POSSESSION OF THE PROPERTY. IT WAS ALSO AGREED VID E CLAUSE-7 OF THE SAID AGREEMENT TO SELL THAT IN CASE THE POST-DA TED CHEQUES ISSUED BY THE PURCHASER IN FAVOUR OF THE SELLER BOU NCES, THE ENTIRE AMOUNT PAID BY THE PURCHASER TO THE SELLER S HALL STAND FORFEITED AND THE AGREEMENT WOULD BECOME NULL AND V OID. IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE POSSESS ION OF THE PROPERTY ALREADY GIVEN WOULD BE REVOKED AND TAKEN B ACK. IN CASE THE CHEQUES ARE WITHHELD FOR PRESENTATION BECAUSE O F ANY WRITTEN 37 REQUEST OF THE PURCHASER, THEN THE PURCHASER WAS LI ABLE TO PAY TO THE SELLER INTEREST @ 12% W.E.F. 1.4.2003 TILL THE DATE OF ENCASHMENT OF POST-DATED CHEQUES. 62. THE AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K .OHRI AND INTERMEDIARY M/S SEPL IS DATED 1.4.2003 AND IT TALKS ABOUT HIS 23% SHARE IN THE INDUSTRIAL PLOT NO.70, INDUSTR IAL AREA, PHASE-1, CHANDIGARH BEING SOLD ALONGWITH EXISTING B UILDING CONSTRUCTED THEREUPON. THE SELLER SHRI R.K.OHRI HA D AGREED TO SELL BACK PORTION OF THE PROPERTY ALONGWITH CONSTRU CTED BUILDING THEREUPON TO THE SELLER FOR CONSIDERATION OF RS.1.4 5 CRORES AND AGAINST WHICH HAD RECEIVED CERTAIN PAYMENTS BY WAY OF POST- DATED CHEUQES. THE TERMS AND CONDITIONS OF THE SAI D AGREEMENT FURTHER PROVIDED THAT IN CASE OF NON-ENCASHMENT OF ANY OF THE POST-DATED CHEQUES, THE ENTIRE AMOUNT PAID TILL DAT E WOULD STAND FORFEITED AND THE PURCHASER WOULD HAND OVER THE POS SESSION OF THE PROPERTY AS THE AGREEMENT WOULD BECOME NULL AND VOID. THE SAID CLAUSE DOES NOT MAKE ANY REFERENCE TO RETURN O F ANY MACHINERY. THE SAID AGREEMENT HAVING BEEN FOUND FR OM THE POSSESSION OF THE SELLER SHRI R.K.OHRI DURING THE C OURSE OF SEARCH PROCEEDINGS AT HIS PREMISES AND HAVING BEEN ADMITTED BY HIM IS THE CONCLUSIVE PROOF OF SALE OF 23% SHARE OF THE PROPERTY BY SHRI R.K.OHRI. IT MAY BE MENTIONED HERE THAT A S PER CLAUSE-7 OF THE SAID AGREEMENT TO SELL, IN CASE AGREEMENT IS TERMINATED THEN THE MONEY ALREADY RECEIVED BY THE SELLER WOULD BE FORFEITED AND THE POSSESSION OF THE PROPERTY HANDED OVER BACK TO THE SELLER. THAT THE SAID AGREEMENT TO SELL DOES NOT TALK OF ANY MACHINERY BUT ONLY REFER TO RETURN OF POSSESSION OF PLOT OF LAND, BEHIND PORTION OCCUPIED BY THE TENANT AND BUILDING CONSTRUCTED THEREUPON. THE DIFFERENT COVENANTS OF THE AGREEMEN T TO SELL EXECUTED ON 1.4.2003 DO NOT MAKE MENTION OF ANY PLA NT AND MACHINERY. IN CASE THERE IS TRUTH IN THE PLEA OF T HE ASSESSEE THAT THE SAID SALE CONSIDERATION OF RS.1.45 CRORES CONSI STED OF VALUE OF MACHINERY ALSO, THEN THERE WOULD HAVE BEEN RECIT AL OF RETURN OF PLANT & MACHINERY, WHICH IS MISSING IN THE SAID AGREEMENT TO SELL. IT CANNOT BE CASE OF SELLER THAT HE RECEIVES BACK THE PROPERTY ON TERMINATION OF AGREEMENT, BUT DOES NOT RECEIVE BACK THE MACHINERY, WHICH HAD SUBSTANTIAL VALUE AS PER T HE CASE PUT UP BY THE ASSESSEE BEFORE US. IN THE ABSENCE OF SA ME, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THIS REGARD A ND HENCE THE SAME IS DISMISSED. 63. ANOTHER ASPECT OF THE TRANSACTION IS THAT ON 1. 4.2003 SHRI R.K.OHRI EXECUTED SPA IN FAVOUR OF S/SHRI ASHW ANI KUMAR GUPTA AND ANIL DUBEY AND GPA IN FAVOUR OF SHRI VIJA Y KUMAR GUPTA, COPIES WHICH ARE PLACED IN THE PAPER BOOK FI LED BY THE DEPARTMENT AT PAGES 1 TO 7. THE ASSESSING OFFICER MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND IT WAS FOUND THAT SHRI ANIL DUBEY ONE OF THE DIRECTORS M/S SEPL WAS A PERSON OF SMALL MEANS AND HE HAD NO KNOWLEDGE ABOUT THE WORKING OF THE COMPANY. THE GPA WAS EXECUTED IN FA VOUR OF S/SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA WH O WERE THE ULTIMATE BUYERS I.E. THE COMPANY IN WHICH THEY WERE THE DIRECTORS PURCHASED THE SAID 23% SHARE. 64. THE SALE DEED IN RESPECT OF 23% SHARE IN FAVOUR OF M/S VISHNU ESTATES LTD. WAS EXECUTED ON 2.4.2003 UNDER WHICH SHRI R.K.OHRI THROUGH GPA HOLDER SHRI ASHWANI KUMAR GUPT A 38 REGISTERED ON 1.4.2003 SOLD THE PROPERTY IN FAVOUR OF M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMA R GUPTA. THE COPY OF THE SAID SALE DEED IS PLACED AT PAGES 1 2 TO 20 OF THE PAPER BOOK FILED BY THE REVENUE. AS PER THE COVENA NTS OF THE SALE DEED IT WAS AGREED UPON THAT 23% SHARE IN THE SAID PROPERTY WOULD BE SOLD TO M/S VALCO INDUSTRIES LTD. FOR TOTA L CONSIDERATION OF RS.70 LACS. THE PURCHASER I.E. M/S VALCO INDUST RIES LTD. HAD PRIOR TO SIGNING THE SALE DEED, MADE PAYMENT TO THE EXTENT OF RS.55 LACS OUT OF TOTAL CONSIDERATION OF RS.70 LACS I.E. RS.5 LACS THROUGH CHEQUE DATED 23.12.2002 AND RS.50 LACS THRO UGH CHEQUE DATED 10.2.2003. THE BALANCE CONSIDERATION OF RS. 15 LACS WAS PAID VIDE CHEQUE DATED 2.4.2003. THE PHYSICAL POSS ESSION OF THE PROPERTY WAS HANDED OVER, AS PER RECITALS OF THE SA LE DEED, BEFORE THE EXECUTION OF THE SAID SALE DEED. THIS ESTABLIS HES THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS INVOLVE D IN THE TRANSACTION OF PURCHASE OF THE PROPERTY PRIOR TO TH E SIGNING OF THE SALE DEED AS THE SALE CONSIDERATION WAS PAID IN ADVANCE, WITHOUT EXECUTING ANY DOCUMENT. 65. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 3.4.2003 SHRI R.K.OHRI ADMITTED THAT HE HAD SOLD HI S SHARE IN THE PROPERTY NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGAR H THROUGH SHRI MUKESH MITTAL FOR SALE CONSIDERATION OF RS.2.3 5 CRORES BY WAY OF ACCOUNT PAYEE CHEQUES AND BANK DRAFTS. IT W AS FURTHER STATED BY SHRI R.K.OHRI THAT THE POWER OF ATTORNEY AND THE SALE DOCUMENTS WERE EXECUTED WITH TWO SEPARATE PARTIES I N WHICH ONE OF THEM WAS A GROUP OF INDIVIDUAL AND OTHER WAS BUS INESS CONCERN OF PRIVATE COMPANY LIMITED. SHRI R.K.OHRI ADMITTED THAT THE ORIGINAL AGREEMENT TO SELL WAS AVAILABLE A T PAGE NOS.73 TO 76 OF ANNEXURE-A-I OF SEIZED DOCUMENTS WHICH WAS FOR CONSIDERATION OF RS.1.45 CRORES. IT WAS FURTHER A DMITTED THAT ON THE SAME DATE HE GAVE GPA OF 23% SHARE TO SHRI ASHW ANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA. THIS FURTHER STR ENGTHENS THE POINT THAT M/S VALCO INDUSTRIES LTD. WAS INVOLVED I N THE TRANSACTION WITH SHRI R.K.OHRI, WHO IN ADDITION TO RECEIVING PART CONSIDERATION HAD ALSO EXECUTED GPA IN FAVOUR OF TH E CONCERNED PERSON. 66. THE STATEMENT OF SHRI ASHWANI KUMAR GUPTA, DIRE CTOR OF M/S VISHNU ESTATES LTD. WAS ALSO RECORDED ON 3.9.20 04 IN WHICH HE CLAIMED THAT NO PROPERTY DEALER OR AGENT WAS INV OLVED IN THE DEAL AND DIRECT DEAL WAS MADE WITH THE SELLER. HOW EVER, HE STATED THAT HE DID NOT REMEMBER THE NAME OF SELLER. HE WAS CONFRONTED WITH THE AGREEMENT OF SALE DATED 1.4.200 3 OF PROPERTY FOR SUM OF RS.1.45 CRORES TO WHICH HE REPLIED THAT HE HAD NO KNOWLEDGE OF THE SAME AND IT WAS NOT FOUND FROM HIS PREMISES OR POSSESSION. FURTHER HE WAS ALSO CONFRONTED WITH TH E HAND WRITTEN PAPER WHICH WAS FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI, WHICH CONTAINED DETAILS OF PAYMENT IN RES PECT OF THE PLOT NO.70, INDUSTRIAL AREA, PHASE-1, CHANDIGARH AN D HIS REPLY WAS THE SAME THAT HE HAD NO KNOWLEDGE OF THE TRANSA CTION SHOWN IN THE PAPER. FURTHER THE SAID PAPER WAS NOT FOUN D FROM HIS POSSESSION OR PREMISES. BUT IN THE STATEMENT RECOR DED ON 3.9.2004 HE ADMITTED THAT HE DOES NOT REMEMBER THE NAME OF THE SELLER AND THE DEAL WAS AS PER THE SALE DEED. HOWE VER, HE STATED THAT THE DEAL WAS NEGOTIATED WITH ONE SHRI R.K.OHRI R/O SECTOR 9/5, NOW I DO NOT REMEMBER HIS FULL NAME AND ADDRES S .. HE FURTHER CLAIMED THAT THE PAYMENTS WERE MADE IN THE ACCOUNT OF 39 M/S SEPL AND NO PAYMENT WAS MADE BY HIM TO SHRI R.K .OHRI. HOWEVER, THE DATES AND PERIODS DURING WHICH THE AMO UNTS OF RS.70 LACS HAD BEEN PAID BY THE ASSESSEE AND THE PA YMENTS HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY REFLECT THAT NEG OTIATION FOR PURCHASE OF THE PROPERTY HAD STARTED IN DECEMBER 20 02 AND THE PAYMENTS TO SHRI R.K.OHRI WERE MADE BY M/S SEPL OUT OF PAYMENTS RECEIVED FROM M/S VALCO INDUSTRIES LTD. T HE ENTIRE EXERCISE CLEARLY ESTABLISHES THE CASE OF THE ASSESS ING OFFICER THAT SHRI ANIL DUBEY WAS INTRODUCED AS DIRECTOR OF M/S S EPL AS PURCHASER IN ORDER TO CONCEAL THE REAL CONSIDERATIO N AMOUNT. FURTHER THE CHEQUES FOR PAYMENT TO SHRI R.K.OHRI WE RE SIGNED BY ONE SHRI NARESH KUMAR SHARMA, WHO HAS ALSO SIGNED A S DIRECTOR OF M/S SEPL (AS IS CLEAR FROM THE DOCUMENTS FOUND D URING THE COURSE OF SEARCH I.E. PAGES 4 TO 9 AND 43 TO 47 OF ANNEXURE- 1/342, SECTOR 9, CHANDIGARH). THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS INVESTIGATED AND FOUND THAT SHRI NARESH KUMAR SHARMA, R/O HOUSE NO.454, SECTOR 28, CHANDIGA RH WAS WORKING AS SMALL TIME MUNSHI IN DISTRICT COURTS AND WAS HAVING MEAGER INCOME. THIS PROVES THE STAND OF THE ASSESS ING OFFICER THAT M/S SEPL WAS MERELY A FAADE TO COVER UP THE R EAL TRANSACTION BETWEEN SHRI R.K.OHRI AND THE ASSESSEE. 67. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES ELABO RATE EXERCISE HAD BEEN CARRIED OUT BY THE ASSESSING OFFI CER TO COLLECT INFORMATION AND ALSO TO RECORD THE STATEMENT OF VAR IOUS CONNECTED PERSONS TO COME TO THE CONCLUSION THAT TH E SHARE IN THE PROPERTY HAD BEEN PURCHASED FOR RS.1.45 CROROES AGA INST THE REGISTERED VALUE OF RS.70 LACS. 68. THE STATEMENT OF SHRI ANIL DUBEY WHO HAS SIGNED AS DIRECTOR OF M/S SEPL WAS RECORDED ON 18.10.2004 AND WHEN HE WAS CONFRONTED WITH THE AGREEMENT TO SELL HE STATED THAT HE DOES NOT KNOW ANYTHING ABOUT THE AGREEMENT AS HE WAS INS TRUCTED BY SHRI VIVEK MOHAN MITTAL TO GO TO THE HOUSE OF SHRI R.K.OHRI. HE STATED THAT HE HAD NOT MADE ANY TALK TO SHRI R.K.OH RI AS HE HAD VERY MEAGER INCOME AND COULD NOT THINK TO PURCHASE ANY SUCH PROPERTY. HE FURTHER STATED THAT HE HAD PUT SIGNAT URE ON ALL THE PAPERS OF SHRI VIVEK MOHAN MITTAL AND FAMILY. 69. ALL THE ABOVE DOCUMENTS AND SEQUENCES OF EVENTS HAVE CLEARLY BEEN CREATED FOR SELF SERVING PURPOSES. IN OUR OPINION SAME CANNOT BE RELIED UPON AND IN THIS REGARD, WE W OULD REFER TO FAMOUS DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN IT WAS HELD THAT IT IS TRUE THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE A RE REASONS TO BELIEVE THAT APPARENT IS NOT REAL BUT THEN THE TA XING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HA VE FURTHER OBSERVED THAT, SCIENCE HAS NOT YET INVENTED ANY IN STRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES . 70. EXAMINED IN THE LIGHT OF THE PROPOSITION LAID D OWN BY THE HON'BLE APEX COURT IN CIT VS. DURGA PRASAD MORE (SU PRA), THE TRANSACTION ENTERED INTO BY THE ASSESSEE HAS TO BE SEEN IN THE 40 PERSPECTIVE OF THE TOTAL EVENTS. THE CASE OF THE A SSESSEE IS THAT IT HAD PURCHASED THE SAID ASSETS AT THE DECLARED VALUE OF RS.70 LACS AND WAS NOT AWARE OF THE AGREEMENT TO SELL DATED 1. 4.2003 EXECUTED FOR RS.1.45 CRORES FOR THE SAID PROPERTY. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THE AGREEMENT TO SE LL MARKED AS ANNEXURE A DATED 23.12.2002 TALKS ABOUT THE MACHI NERY, WHICH WAS NOT PURCHASED BY THE ASSESSEE AND HENCE THE SAL E VALUE DECLARED BY THE ASSESSEE WAS CORRECT. AS OBSERVED EARLIER THIS AGREEMENT TO SELL WAS NEVER FOUND DURING SEARCH OF THE PREMISES OF SHRI R.K.OHRI AND THE SAME WAS NOT PRODUCED BEFO RE THE ASSESSING OFFICER, HENCE THE SAME HAS NO EVIDENTIAR Y VALUE. THE CIT (APPEALS) HAS WRONGLY RELIED ON THE SAID DOCUME NT WITHOUT COMPLYING WITH THE PROCEDURE LAID DOWN IN RULE 46A AS ELABORATED BY THE HON'BLE PUNJAB & HARYANA HIGH COU RT IN CIT VS. MANISH BUILDWELL PVT. LTD. (SUPRA). TAKING INT O CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CA SE AND VARIOUS DOCUMENTS EXECUTED IN RELATION TO THE SALE OF 23% S HARE IN THE SAID PROPERTY, WHERE THE ASSESSEE HAD ENTERED INTO CIRCUITOUS TRANSACTION TO TRANSFER THE PROPERTY FROM THE SELLE R TO THE PURCHASER, THEN WE ARE OF THE VIEW THAT THE MODUS O PERANDI ADOPTED BY THE ASSESSEE IN INTRODUCING M/S SEPL AS AN INTERMEDIARY BUYER WAS WITH THE INTENTION TO CAMOUF LAGE THE REAL DEAL BETWEEN ORIGINAL SELLER TO THE PURCHASER/ ULTI MATE BUYER OF THE PROPERTY. THE ORIGINAL OWNER OF THE PROPERTY S HRI R.K.OHRI HAD EXECUTED THE AGREEMENT TO SELL ON 1.4.2003 WHIC H ADMITTEDLY WAS FOUND IN HIS POSSESSION AND WAS SEIZED BY THE I NVESTIGATION TEAM. ON THE SAME DATE IN RESPECT OF 23% OF THE S AID PROPERTY SHRI R.K.OHRI EXECUTED THE GPA IN FAVOUR OF SHRI AS HWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA ON 1.4.2003. THE SALE DEED WAS EXECUTED ON 2.4.2003 BY SHRI ASHWANI KUMAR GUPT A DIRECTOR OF M/S VISHNU ASSOCIATES LTD. AS GPA OF SHRI R.K.OH RI IN FAVOUR OF THE COMPANY OF WHICH HE IS THE DIRECTOR I.E. M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMA R GUPTA WHO IS THE BROTHER OF SHRI ASHWANI KUMAR GUPTA. HOWEVER , THE SALE CONSIDERATION FOR 23% SHARE IN THE PROPERTY IN THE AGREEMENT TO SELL WAS RS.1.45 CRORES AND IN THE SALE DEED WAS RS .70 LACS ONLY. THE ASSESSEE CLAIMED THAT IT HAD PURCHASED THE SAID PROPERTY FROM M/S SEPL, WHO IN TURN HAD PURCHASED THE SAME F ROM SHRI R.K.OHRI AND HE HAD NOT DIRECTLY PURCHASED FROM SHR I R.K.OHRI. WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE. UNDOUBTEDLY, THE AGREEMENT TO SELL WAS EXECUTED BETWEEN SHRI R.K .OHRI AND M/S SEPL ON 1.4.20203 EVIDENCING THE PAYMENTS MADE AGAINST THE SALE CONSIDERATION PRIOR TO 1.4.2003. FURTHER SALE DEED EXECUTED BETWEEN M/S SEPL AND M/S VALCO INDUSTRIES LTD. WAS DATED 2.4.2003, EVIDENCING PAYMENTS TOTALING RS.55 LACS O UT OF TOTAL CONSIDERATION OF RS.70 LACS HAVING BEEN MADE PRIOR TO THE DATE OF EXECUTION OF THE SALE DEED. THE DOCUMENT OF SALE D EED WAS EXECUTED AND REGISTERED BY SHRI ASHWANI KUMAR GUPTA , WHO IS ONE OF THE DIRECTORS OF M/S VALCO INDUSTRIES LTD. THE GPA IN HIS FAVOUR BY SHRI R.K.OHRI WAS MADE ON 1.4.2003. THE SALE CONSIDERATION PAID TO SHRI R.K.OHRI WAS BY WAY OF I SSUE OF CHEQUES THROUGH ACCOUNT OF M/S SEPL AND M/S VALCO I NDUSTRIES LTD. HAD ALSO MADE THE PAYMENTS IN THE ACCOUNT OF M /S SEPL. IN CASE WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE CAME INTO PICTURE ONLY ON 1/2.4.2003 THEN HOW PAYMENTS AGAINST SALE CONSIDERA TIONS WERE MADE BY M/S VALCO INDUSTRIES LTD. IN DECEMBER, 2002 . THIS 41 CLEARLY SHOWS THAT THE M/S SEPL WAS JUST USED AS IN TERMEDIARY TO CAMOUFLAGE THE TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BETWEEN SHRI R.K.OHRI AND M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE. IN THE ENTIRETY OF THE FACTS AND CIRCUM STANCES, WHERE 23% SHARE IN THE PROPERTY HAD BEEN AGREED TO BE SOL D FOR RS.1.45 CRORES AND WAS ULTIMATELY SOLD THROUGH REGISTERED S ALE DEED FOR RS.70 LACS CLEARLY ESTABLISHES THE STAND OF THE ASS ESSING OFFICER THAT ON MONEY HAD BEEN PAID IN THE SAID TRANSACTION BY M/S VALCO INDUSTRIES LTD. IN ORDER TO MEET THE PRICE OF RS.1. 45 CRORES. WE FIND NO MERIT IN THE DIFFERENT PLEAS OF THE LEARNED A.R. FOR THE ASSESSEE BEFORE US AS THE SAME ARE CONTRARY TO EACH OTHER. IN THE COURSE OF STATEMENT RECORDED DURING THE SEARCH PROC EEDINGS HE HAD STATED THAT NO PROPERTY DEALER WAS INVOLVED IN THE DEAL. HOWEVER, THE DATES AND PERIOD DURING WHICH THE SUM OF RS.70 LACS HAD BEEN PAID BY M/S VISHNU ASSOCIATES LTD. AN D PAYMENTS HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY REFLECT THA T THE NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY WERE MADE IN DECEMBER, 2002 AND THAT SHRI ANIL DUBEY WAS INTRODU CED AS DIRECTOR OF M/S SEPL WITH WHOM TRANSACTION WAS CARR IED OUT IN ORDER TO PUT A SCREEN ON THE REAL PICTURE. THE WHO LE TRANSACTION LEADS TO CONCRETE CONCLUSION THAT THE PROPERTY HAD BEEN PURCHASED BY M/S VOLCO INDUSTRIES LTD. FOR A SUM OF RS.1.45 CRORES AS AGAINST ITS CLAIM OF RS.70 LACS THROUGH C IRCUITOUS TRANSACTIONS. 71. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, IT IS A FIT CASE TO RAISE CORPORATE VEIL IN ORDER TO DETERM INE THE NATURE OF TRANSACTION. THE COMPANY M/S SEPL HAS BEEN USED AS INTERMEDIARY THROUGH DIRECTOR WHO HAD MEAGER SOURCE OF INCOME AND ONE OF THE DIRECTORS IN THE SAID COMPANY WAS TH E WIFE OF THE ADVOCATE WHO WAS LOOKING AFTER THE CIVIL DISPUTES O F SHRI R.K.OHRI. THOUGH NO ADDITION HAS BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR O NE OF ITS DIRECTOR SMT.ALKA MITTAL W/O SHRI MUKESH MITTAL, BU T THAT ITSELF WOULD NOT SUPPORT THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON 'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE HON'BLE SUPREME COURT IN CIT VS. SRI MEENA KSHI MILLS LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTITY IF IT IS USED FOR TA X EVASION OR TO CIRCUMVENT TAX OBLIGATION, HELD AS UNDER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DE SCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE V EIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTIO N. IT IS TRUE THAT FROM THE JURISTIC POINT OF VIEW THE COMPANY IS A LE GAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED TO DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS MEMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOMIC REALITIES BEHIND THE LEGAL FAADE. FOR EXAMPLE, THE COURT HAS POWER TO DISREGARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR T O CIRCUMVENT TAX OBLIGATION. 42 72. IN THE FACTS OF THE PRESENT CASE, WE HAVE FOUND THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN ORDER TO COMPLETE THE TRANSACTION OF PURCHASE OF 23% SHARE IN THE PRO PERTY FROM SHRI R.K.OHRI TO ITSELF. 73. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE INITIAL AGREEMENT BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR TO TAL CONSIDERATION OF RS.1.45 CRORES ALSO INCLUDED THE C OST OF MACHINERY AT RS.75 LACS WHICH IN TURN HAD NOT BEEN PURCHASED BY THE ASSESSEE M/S VALCO INDUSTRIES LTD. AND HENCE TH E SALE CONSIDERATION AGREED TO BETWEEN THE PARTIES WAS ONL Y RS.70 LACS I.E. THE COST OF THE PLOT AND BUILDING AND THE MACH INERY WAS WITHHELD BY M/S SEPL. THIS WAS THE PLEA RAISED BY THE ASSESSEE BEFORE US. HOWEVER, WE FIND NO MERIT IN THE SAID P LEA OF THE ASSESSEE AS THE TERMINATION CLAUSE IN THE ORIGINAL AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL FO R NON- ENCASHMENT OF CHEQUES TALKS OF HANDING BACK OF THE POSSESSION OF THE PROPERTY AND DOES NOT TALK ABOUT HANDING OVER B ACK MACHINERY WHATSOEVER. AS HELD BY US IN THE PARAS H EREINABOVE, THE SAID AGREEMENT TO SELL MARKED AS ANNEXURE-A PRO DUCED BY THE ASSESSEE BEFORE THE CIT (APPEALS) FOR THE FIRST TIM E IS JUST AN AFTER THOUGHT AND CANNOT BE RELIED UPON. WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN ALLOWING RELIEF TO TH E ASSESSEE BY PLACING RELIANCE ON SUCH AGREEMENT TO SELL, VERACIT Y OF WHICH HAS NOT BEEN ESTABLISHED. 74. RELIANCE OF THE LEARNED A.R. FOR THE ASSESSEE O N THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN SURAJ LAMP INDUSTRIES PVT. LTD. VS. STATE OF HARYANA REPORTED IN 2011-TIOL- 101-SC-MISC IN RESPECT OF SCOPE OF AGREEMENT ITSELF WORKS AGAINST THE ASSESSEE AS THE ASSESSEE HAS ALSO BUILT ITS CASE ON THE AGREEMENT TO SELL MARKED AS ANNEXURE-A AS BEING THE ORIGINAL AGREEMENT IN WHICH THE SALE PRICE OF THE LAND WAS F IXED AT RS.70 LACS AND SALE VALUE OF MACHINERY WAS FIXED AT RS.75 LACS. IN VIEW OF THE SEQUENCE OF EVENTS AND THE DOCUMENTS EXECUTE D IN RELATION TO THE SALE OF 23% SHARE OF THE PROPERTY, WE HOLD T HAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE M/S VALCO IN DUSTRIES LTD. FOR A CONSIDERATION OF RS.1.45 CRORES, AGAINST WHIC H IT HAD SHOWN SALE PRICE OF RS.70 LACS ONLY AND THE BALANCE ON MO NEY OF RS.75 LACS IS TO BE ASSESSED IN THE HANDS OF M/S VALCO I NDUSTRIES LTD. ON SUBSTANTIVE BASIS AS INCOME FROM UN-DISCLOSED SO URCES, IN VIEW OF THE CORPORATE ENTITY BEING A SEPARATE ENTIT Y HAVING PURCHASED THE SAID ASSETS. IN VIEW OF OUR HOLDING THAT THE ADDITION OF RS.75 LACS IS TO BE MADE IN THE HANDS O F THE COMPANY M/S VALCO INDUSTRIES LTD. NO SEPARATE ADDITION IS M ERITED IN THE HANDS OF THREE DIRECTORS S/SHRI AJAY KUMAR GUPTA, A SHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE GROUND OF A PPEAL NO.1 RAISED BY THE REVENUE IN ITA NO.663/CHD/2008 I S ALLOWED AND GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NOS.660 TO 662/CHD/2008 IS DISMISSED. 33. IN THE FACTS OF THE PRESENT CASE ALSO COMPANY M /S SEPL HAS BEEN USED AS AN INTERMEDIARY TO COMPLETE TRANSACTION OF SALE OF 27% SHARE IN THE PROPERTY BETWEEN SMT.ERA OHRI AND HER DAUGHT ERS AND THE ULTIMATE PURCHASER I.E. THE ASSESSEE BEFORE US WHO HAVE PURCHASED THE 43 PROPERTY IN JOINT SHARE. APPLYING PRINCIPLE LAID DOWN BY THE TRIBUNAL IN THE CASE OF ACIT VS. SH.AJAY KUMAR GUPTA & OTHER S (SUPRA),WE ARE OF THE VIEW THAT M/S SEPL HAS BEEN USED AS AN INTER MEDIARY IN THE PRESENT CASE ALSO. THE SAID INTERMEDIARY HAD PURCH ASED THE PROPERTY I.E. 50% SHARE IN THE PROPERTY FOR RS.3.20 CRORES A ND, ON THE OTHER HAND, HAD SOLD 50% SHARE TO TWO DIFFERENT BUYERS I. E. 27% SHARE TO THREE ASSESSEES BEFORE US FOR TOTAL CONSIDERATION O F RS.50 LACS AND BALANCE 23% SHARE HAD BEEN SOLD TO SHRI VIVEK MOHAN MITTAL AND HIS FAMILY MEMBERS FOR TOTAL CONSIDERATION OF RS.80 LAC S. IN OTHER WORDS, IT MEANS THAT THE ASSESSEE HAD PURCHASED THE PROPER TY FOR RS.50 LACS (27% SHARE), WHICH WAS BOUGHT FOR RS.3.20 CRORES BY THE INTERMEDIARY. THE DATES OF THE TRANSACTION EXECUTED AND THE DATES OF PAYMENT REFLECT THAT THE ASSESSEE BEFORE US HAD USED CIRCUITOUS TRA NSACTIONS IN ORDER TO PURCHASE THE SAID PROPERTY FOR A LOWER CONSIDERATIO N AS AGAINST THE SALE PRICE PAID BY THE INTERMEDIARY TO PURCHASE THE SAID PROPERTY. ACCORDINGLY, WE HOLD THAT THE ASSESSEE HAD PAID ON MONEY TO PURCHASE THE SAID ASSET THROUGH CIRCUITOUS TRANSACTIONS BY F OLLOWING THE FINDINGS OF THE TRIBUNAL IN THE CASE OF ACIT VS. SH . AJAY KUMAR GUPTA & OTHERS VIDE PARAS 46 TO 74 OF THE ORDER. TH ERE IS NO MERIT IN THE PLEA OF ASSESSEE THAT THE PROPERTY WAS PURCHASE D AFTER 3 YEARS FROM THE DATE OF PURCHASE BY THE INTERMEDIARY. 34. FOLLOWING THE REASONING IN ACIT VS SH.AJAY KUMA R GUPTA & OTHERS (SUPRA), WE HOLD THAT ALL THE ASSESSEES BEFO RE US WHO HAD JOINTLY PURCHASED 27% SHARE IN THE PROPERTY HAD DEC LARED VALUE OF RS.50 LACS WHICH IS IN ADDITION TO ON MONEY PAID TO PURCHASE THE SAID ASSETS, WHICH HAS TO BE ASSESSED AS UNDISCLOSED INC OME IN THE HANDS OF THE ASSESSEE. 44 35. THE ASSESSING OFFICER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS HAD NOTED THAT A VALUATION REPORT WAS F OUND FROM THE POSSESSION OF THE ASSESSEE DURING THE SEARCH & SEIZ URE OPERATION. THE SAID PROPERTY AS ON 16.7.2004 WAS VALUED AT RS.1.60 CRORES I.E. 27% SHARE IN INDUSTRIAL PLOT NO.70, PHASE-1, CHANDIGARH OWNED BY THREE ASSESSEES BEFORE US. FURTHER DURING THE COURSE OF SEARCH AT THE PREMISES OF SHRI MUKESH MITTAL, CERTAIN DOCUMENTS W ERE FOUND FROM HIS COMPUTER AND ONE AGREEMENT TO SELL DATED 21.12. 2001 WAS BETWEEN M/S SEPL AND S/SHRI NARINDER MOHAN MITTAL HUF, SURI NDER MOHAN MITTAL HUF AND JATINDER MOHAN MITTAL HUF. THE SALE CONSIDERATION WAS MENTIONED AT RS.1 CRORE. IN THE SAID AGREEMENT TO SELL THE DETAILS OF THE CHEQUES PAID BY THE ASSESSEES BEFORE US TOTA LING RS.35 LACS WERE MENTIONED AND THE SAME TALLIED WITH THE CHEQUES MEN TIONED IN THE AGREEMENT TO SELL DATED 21.12.2001 IN WHICH THE SAL E CONSIDERATION WAS MENTIONED AT RS.50 LACS. THE ASSESSING OFFICER IN VIEW OF THE SAID AGREEMENT TO SELL EVIDENCING SALE CONSIDERATION OF RS.1 CRORE MADE ADDITION IN THE HANDS OF THE ASSESSEES TO THE EXTEN T OF RS.50 LACS AND RS.16,66,666/- PER ASSESSEE AND ADDITION WAS MADE T O THAT EXTENT. WE ARE PAINED AT THE ATTITUDE OF THE ASSESSING OFFICER IN NOT APPRECIATING THE FACTS IN TOTALITY AFTER HAVING FOUND THE DOCUME NTS DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE PROPERT Y WHICH WAS PURCHASED FOR SUM OF RS.3.24 CRORES (50% SHARE), WA S SOLD BY INTERMEDIARY FOR TOTAL SALE CONSIDERATION OF RS.50 LACS FOR 27% SHARE AND FOR SUM OF RS.80 LACS FOR 23% SHARE IN THE SAID PROPERTY I.E. TOTALING RS.1.30 CRORES. THE CIT (APPEALS) WHILE G IVING RELIEF TO THE ASSESSEE HAS BRUSHED ASIDE THE SAID DOCUMENTS AND H AS FAILED TO CONSIDER OTHER FACTS AND EVIDENCES FOUND DURING THE COURSE O F SEARCH OPERATION AND HAD DELETED THE ADDITION MADE BY THE ASSESSING OFFI CER. WE REVERSE THE ORDER OF THE CIT (APPEALS). HOWEVER, AS THE TRIBUN AL HAS NO POWER OF 45 ENHANCEMENT, WE RESTRICT THE ADDITION IN THE HANDS OF THE ASSESSEE TO RS.50 LACS I.E. RS.16,66,666/- IN EACH HAND AS THE ASSESSING OFFICER HAD MADE THE ADDITION TO THAT EXTENT ONLY. IT MAY BE PLACED ON RECORD THAT IN OTHER BUNCH OF APPEALS I.E. ACIT VS. M/S VA LCO INDUSTRIES LTD. I.E. ITA NO.663/CHD/2008 WHERE THE SELLER SHRI R.K. OHRI HAD SOLD 23% SHARE IN THE PROPERTY FOR RS.1.45 CRORES TO TO THE INTERMEDIARY M/S SEPL AND THE SAID COMPANY HAD PURCHASED THE SAI D SHARE FOR RS.70 LACS FROM THE INTERMEDIARY, ADDITION OF RS.75 LACS WAS MADE IN THE HANDS OF THE COMPANY ON ACCOUNT OF ON MONEY PAI D IN THE SAID TRANSACTION. HOWEVER, IN VIEW OF THE ORDER OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS.16,66,666/- IN THE HANDS OF EACH OF THE ASSESSEE BEFORE US WE RESTRICT THE ADDITION TO RS.1 6,66,666/-. THE GROUND OF APPEAL RAISED BY THE REVENUE IS THUS ALLO WED IN ALL THE APPEALS. 36. THE FACTS IN ITA NO. 794/CHD/2008 ARE IDENTICAL TO THE FACTS IN ITA NOS. 795 & 796/CHD/2008 AND OUR DECISION IN ITA NO. 794/CHD/2008 SHALL APPLY MUTATIS MUTANDIES TO ITA N OS. 795 & 796/CHD/2008. 38. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE IN ITA NOS.794 TO 796/CHD/2008 ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH